Many people who are fed up with the big-city rat race fantasize about leaving it all. They fantasize about moving to a small, close-knit community and starting a business. They dream of controlling their own destiny, rather than the pressures of a corporate job. WalletHub recently compiled a list of the best small cities to start a business in. The Study’s authors note that starting a business in a small town has both pros and cons. For example,
Small-town entrepreneurs benefit from a lower cost of living and less competition. On the other hand, they may suffer from a limited customer and employee base.
The study compared more than 1,200 cities with populations between 25,000 and 100,000 residents and evaluated them on three factors:
- Business environment - Including the average growth in the number of small businesses, the average revenue per business, and the number of startups per capita.
- Access to resources - Including financing, possible investors and employees.
- Business costs - Including the cost-of-living, corporate taxes, office space and labor costs.
Holland, Michigan (love all the tulips) was at the top of the list. They were followed by Carbondale, Illinois; Springville, Utah; East Chicago, Indiana; and Jefferson, Missouri in the top five. Should you pack your bags and move to one of these? Not necessarily. Some cities scored high in one area, but low in another area. For example, Holland, Michigan scored well for their business environment, but not so good if you need access to resources.
The most important factors to consider when deciding to launch your business are the ones that matter to you most.
You need to decide what your business needs to succeed. For example, if you want to start a business that requires people physically coming into your location, the rental costs for your space and availability of a large enough customer base will probably be your top considerations. Or, if you are staring a technology firm that services clients remotely, a larger concern would be the availability of skilled employees in your field.
Start with these questions when considering a small-town location:
- Does the town offer small business owners assistance?
Are there tax or other financial incentives to start a business or locate in their area? Are there economic development, networking and support organizations are available for business owners?
- Is the town close to larger cities or transportation hubs?
Being within driving distance of a larger city may give you the best of both worlds. You can live a peaceful, lower-cost lifestyle while having relatively easy access to customers, employees and transportation for products or business travel.
- What does the local employee pool look like?
Do the available skills match what you need? For example, starting a manufacturing business in a town where large manufacturers have closed can give you a lot of experienced employees to draw from.
- Is there a nearby college or university to tap for educated, entry-level employees?
Forming a partnership with local colleges and universities may help you develop a pipeline of specialized skilled workers.
- How much money does your new business need?
If you will need financing or need to raise a substantial amount of capital, you may want to investigate how easy it is to access capital in the small town or make arrangements to obtain it before you move.
Finally, opening a business in a small town be more work than a large city.
Your business is more visible in a small town than in a larger city, so any mistakes you make will be magnified and can be harder to correct. In addition, just because you own the only Cuban restaurant in town, it doesn’t mean it will last. You have to put as much effort, heart and energy into your small-town startup as you would anywhere else - if not more.