The Best Small Cities for Small Business: 2023 Report

Considered Data Factors

We factored in multiple data points that we deemed essential, from average income to tax scores, to understand the value of small cities for small businesses. We looked at over 300 cities to come up with the results of our report.

• Population: According to the US Census, a city’s population must fall between 50,000 to 75,000 people to be considered a “small city.” Most of the spots in the top ten hit the high end of the scale but still manage to balance out the urban stride with a more hometown vibe.
• Percent of residents with at least a Bachelor’s degree (15%): For your city to qualify for this list, you have to show us your smarts. We completed an analysis of the percentage of the population over 25 years old who have received a bachelor’s degree or higher from an accredited university or college. This information came from the 2021 American Community Survey 5-Year Estimate. (A higher percentage positively impacted the final score.)
• Travel time to work/commute (15%): According to the 2021 American Community Survey 5-Year Estimate, this includes the average total travel time it takes working individuals 16 years and older (who do not work at home) to reach work from their residences every day. This takes into account the time spent carpooling, waiting for public transportation, navigating traffic, and “other activities related to getting to work.” (A higher travel time negatively impacted the final score.)
• Income per capita (15%): For this particular study, mo’ money = mo’ problems. Based on data from the 2021 American Community Survey 5-Year Estimate, we used per median capita income to measure labor costs. In the case of small businesses, the lower the per capita income, the better (the lower the score, the lower the operating costs).
• Broadband Access Score (10%): High-speed internet is crucial to modern business operations. We analyzed information taken from the 2021 American Community Survey. We looked at the percentage of homes in a city with access to broadband internet as a proxy for good internet coverage.
• Loans per business (20%): New businesses rarely get off the ground without a loan. How easy is it to get a business loan in your city? Our team gathered data from the SBA Paycheck Protection Program to find this out. From there, we determined the average loan amount by state.
• Tax score (25%): Lower taxes typically provide a better environment to establish a new business. So to determine each city’s tax score, we pulled information from the 2022 State Business Tax Climate. The higher a city’s tax score, the better its ranking.

#1 Cheyenne, Wyoming

Although it wasn’t even the best small city in its state last year, Cheyenne showed up for small businesses this year. With only 20 minutes of commute time and the top tax score across all 50 states, Cheyenne proved to be the top location for small businesses to start up. Cheyenne wasn’t the only city in Wyoming to break our top 50 cities—Casper came in at 21.

#2 Missoula, Montana

Making a return to the top 10 this year, Missoula, MT continues to make strides as a great small city for small businesses. One of the more populated small cities at just over 74,000 residents, they jumped to the second spot on our list for a good reason—92.5% of homes have access to broadband internet. And with a top-five tax score, it’s no wonder small businesses are taking their talents to Missoula.

#3 Amers, Iowa

Ames, IA makes its debut, and on high ground, as the third best small city to start a small business. The land of 66,000+ Iowans makes it easy to travel to and from work. Ames aims to bring small businesses to its small corner of the Hawkeye State with an average commute time clocking in at only 17.5 minutes—one of the quickest times on our list.

#4 Shawnee, Kansas

Just missing the top three was Shawnee, KS. This small city boasts one of the highest percentages of homes with access to broadband internet at nearly 96%. Although its tax score was mid at best, this small Kansas city still had one of the best average labor costs.

#5 Lafayette, Indiana

With a top 10 tax score, Indiana housed one of the better small cities in our country—Lafayette. This Hoosier town, just northwest of Indianapolis, has broadband access to nearly 90% of its homes. It makes it an excellent destination for small businesses to stay connected with their customers in person and online.

#6 Ankey, Iowa

Iowa was the only state with multiple small cities in the top 10. In comes Ankeny, home of 70,287 residents and sixth in our top 10 small cities for small businesses. 93.5% of Ankeny homes have broadband access, so it’s little wonder why small businesses should choose this place to have their start-up.

#7 Tamarac, Florida

Florida has the fourth-best tax score in the country, making it easy for the small city of Tamarac, FL to make it to our top 10. 91% of homes in Tamarac have broadband access, allowing for online connections to be made across the city. And with one of the lower per median capita incomes ($59.885), labor costs remain low, making any small business owner feel warm and sunny inside.

#8 Bismark, North Dakota

Bismarck, ND makes its debut in our top small cities for small businesses. In this city, you can get to work quickly, in slightly over 17 minutes. This makes all small business owners happy, ensuring their employees get to work on time, barring unforeseen circumstances.

#9 Novi, Michigan

Image by Wasrts, CC BY-SA 3.0 https://creativecommons.org/licenses/by-sa/3.0, via Wikimedia Commons

Coming in at 98% of households with broadband access, nearly every home in Novi, MI can get its small business products online, which makes it very lucrative from a digital perspective.

#10 Eagan, Minnesota

Another city showing off its broadband prowess, Eagan, MN rounds out our top 10 small cities best for small businesses. 95% of Eagans?—Eagonians?—have broadband access for a connection to the much larger world. Eagan likes to keep it small, but it’s a big hot spot for small businesses to succeed.