2021's Best & Worst Small Cities to Start a Business

Wallet Hub, Apr 20, 2021

Size matters when choosing a city in which to launch a startup. As many veteran entrepreneurs — and failed startups — understand well, bigger is not always better. A city with a smaller population can offer a greater chance of success, depending on an entrepreneur’s type of business and personal preferences. The best cities can help new businesses survive economic shocks such the COVID-19 pandemic, which already caused around 100,000 small businesses to close permanently in 2020.

Every small city offers unique advantages and disadvantages to new business owners. Some benefits include lower overhead costs, stronger relationships with customers and the potential to become a big fish in a little pond. But there are plenty of drawbacks, too. For one, entrepreneurs who want to build a large professional network aren’t likely to make as many connections in a town with fewer residents. Other restrictions might include limited industry options, a less diverse customer base, and difficulty attracting and keeping top talent.

To determine the best small cities to start a business, WalletHub compared the business-friendliness of more than 1,300 small-sized cities. Their data set of 20 key metrics ranges from average growth in number of small businesses to investor access to labor costs....

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