The Best Small Cities for Small Business: 2023 Report

Apr 27 | By Alex Rivera

See the full list of cities here

See the top city in each state here

The American Dream: start your own business, make a lot of money. While that might be an oversimplification of a more complex idea, the sentiment still rings true; the American Dream is “the ideal by which equality of opportunity is available to any American, allowing the highest aspirations and goals to be achieved.” Small US cities provide the perfect backdrop for achieving the Dream. From less traffic to lower labor costs, these cities pride themselves on staying small, providing suitable conditions for small businesses to thrive.

For a sixth year, wanted to know which small cities are best for starting a small business. Among other criteria, we considered population, commute, and broadband access to find the small cities where small businesses can succeed. While places like Logan, UT and Richland, WA, had quite a drop-off from last year’s report, other cities like Ames, IA and Cheyenne, WY stepped up their small-city game with extraordinary results. Let’s dive deeper to see which small cities you should move your small business to.

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.

Top 10 US Small Cities for Small Business

#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, 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.

The top 50 cities to start a small business:

RankCityStatePopulationFinal Score
1CheyenneWyoming65,051 86
2MissoulaMontana74,822 78
3AmesIowa66,424 72
4ShawneeKansas67,511 71
5LafayetteIndiana70,835 71
6AnkenyIowa70,287 70
7TamaracFlorida71,541 70
8BismarckNorth Dakota74,138 69
9NoviMichigan66,560 68
10EaganMinnesota68,642 68
11Daytona BeachFlorida74,437 67
12VictoriaTexas65,377 67
13LakevilleMinnesota72,812 67
14MuncieIndiana65,292 67
15West Des MoinesIowa69,792 66
16WestonFlorida67,312 66
17North Richland HillsTexas70,209 65
18St. JosephMissouri71,602 65
19ConwayArkansas65,121 65
20JanesvilleWisconsin65,942 65
21CasperWyoming58,656 65
22JacksonvilleNorth Carolina72,876 65
23Rock HillSouth Carolina74,102 65
24Johnson CityTennessee71,278 65
25MaldenMassachusetts65,074 64
26WaukeshaWisconsin71,256 64
27Eau ClaireWisconsin69,441 63
28AlbanyGeorgia69,048 63
29RogersArkansas71,112 63
30AlpharettaGeorgia66,127 62
31JupiterFlorida60,802 61
32KennerLouisiana65,364 61
33SkokieIllinois66,422 61
34JacksonTennessee68,114 61
35NoblesvilleIndiana70,926 61
36LauderhillFlorida73,458 61
37Pinellas ParkFlorida53,202 61
38SarasotaFlorida54,764 60
39BlaineMinnesota70,935 60
40BozemanMontana54,539 60
41Redondo BeachCalifornia69,781 60
42MargateFlorida58,001 60
43HarlingenTexas71,925 60
44Great FallsMontana60,403 60
45WaterlooIowa66,941 60
46Grand JunctionColorado66,964 60
47BradentonFlorida55,905 59
48Maple GroveMinnesota70,726 59
49CorvallisOregon59,864 59
50DublinCalifornia71,674 59

The top city for small business in each state:

Queen CreekArizona108
Redondo BeachCalifornia41
Grand JunctionColorado46
New BritainConnecticut133
Idaho FallsIdaho80
Bowling GreenKentucky65
St. JosephMissouri18
Carson CityNevada154
PassaicNew Jersey135
Mount VernonNew York205
JacksonvilleNorth Carolina22
BismarckNorth Dakota8
Rock HillSouth Carolina23
Johnson CityTennessee24
Alaska, Hawaii, New Mexico, Rhode Island, South Dakota, Vermont, and West Virginia were not included in this ranking.
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