Starting a business involves navigating startup costs, regulations, and legal complexities—but according to a recent study, your choice of city may be the decisive factor.
WalletHub analyzed over 1,300 small cities (populations between 25,000 and 100,000) to identify the most favorable environments for new businesses. The evaluation covered three core dimensions:
- **Business Environment:** Average commute time, startup density, industry diversity, and related metrics
- **Access to Resources:** Higher education availability and investor accessibility
- **Business Costs:** Cost of living, tax burden, labor expenses, and office-space affordability
Each city received a composite score based on weighted performance across these metrics, with rankings derived from U.S. Census Bureau, Bureau of Labor Statistics, FDIC, and Indeed data.
The Small-City Advantage
"The benefits of starting a business in a small city include lower overhead costs, stronger customer relationships, and the potential to become a big fish in a little pond," said WalletHub analyst Chip Lupo. However, he cautioned that entrepreneurs seeking expansive professional networks may find smaller populations limiting, with potential constraints including fewer industry options, less customer diversity, and challenges in attracting top talent.
Geographic Patterns
California had the strongest overall representation among the 1,334 cities studied. Florida and Utah dominated the top tier, accounting for 10 of the top 15 positions combined. Conversely, Alaska and Vermont were each represented by a single city—Fairbanks and Burlington, respectively.
Top 15 Small Cities for Starting a Business
*Note: When city-specific photos were unavailable, images of nearby locations were used.*
**15. Palm Beach Gardens, Florida**
- Business Environment: 5th | Access to Resources: 101st | Business Costs: 707th
- Population: ~63,000 (2024 Census estimate)
- Borders North Palm Beach
**14. Midvale, Utah**
- Business Environment: 137th | Access to Resources: 16th | Business Costs: 313th
- Population: 36,000 residents; ~1,300 businesses
- Located 12 miles south of Salt Lake City
- Headquarters of CHG Healthcare (serving 20M+ patients)
**13. Post Falls, Idaho**
- Business Environment: 16th | Access to Resources: 304th | Business Costs: 302nd
- Population: ~45,800 (2024)
- Located on the Idaho-Washington border, east of Spokane
- Offers state incentives, including energy conservation rebates and a $100,000 personal property tax exemption
**12. Lake Worth Beach, Florida**
- Business Environment: 14th | Access to Resources: 540th | Business Costs: 259th
- Population: ~44,000 (2024)
- Features a "lively downtown" just south of Palm Beach
**11. South Bradenton, Florida**
- Business Environment: 60th | Access to Resources: 926th | Business Costs: 133rd
- Population: ~26,000
- Census-designated place on Florida's Gulf Coast in Manatee County
**10. Dover, Delaware**
- Business Environment: 6th | Access to Resources: 62nd | Business Costs: 854th
- Population: ~40,000 (Delaware's second-largest city)
- Located in a state where 66% of Fortune 500 companies are incorporated
**9. Ocala, Florida**
- Business Environment: 142nd | Access to Resources: 95th | Business Costs: 115th
- Population: ~70,000 (2024)
- Featured on Forbes' 2016 "10 Best Cities for Future Job Growth"
**8. Cheyenne, Wyoming**
- Business Environment: 7th | Access to Resources: 698th | Business Costs: 111th
- Population: 65,000+ (Wyoming's most populous city)
- *Note:* Wyoming lacks a general state business license; municipal licensing fees in Cheyenne can be complex to navigate
**7. Boca Raton, Florida**
- Business Environment: 23rd | Access to Resources: 6th | Business Costs: 744th
- Population: ~100,000
- Located between Palm Beach and Miami
**6. Cedar City, Utah**
- Business Environment: 13th | Access to Resources: 197th | Business Costs: 159th
- Population: 40,000 (Iron County's most populous city)
- Iron County reported Utah's third-largest job growth rate in FY2025
**5. Greenville, South Carolina**
- Business Environment: 102nd | Access to Resources: 7th | Business Costs: 181st
- Population: ~75,000 (2024)
- Home to 40+ Fortune 500 companies and 100+ headquarters
**4. Bozeman, Montana**
- Business Environment: 2nd | Access to Resources: 44th | Business Costs: 519th
- Population: ~58,000 (2024)
- One of Montana's fastest-growing cities
**3. Washington, Utah**
- Business Environment: 4th | Access to Resources: 242nd | Business Costs: 238th
- Population: 35,000
- Nearly 42% growth in small businesses (2017–2023)
- High startup density per capita
**2. Fort Myers, Florida**
- Business Environment: 44th | Access to Resources: 4th | Business Costs: 191st
- Population: Just under 100,000 (2024)
- One of the highest investor-per-capita rates nationwide
**1. St. George, Utah**
- Business Environment: 1st | Access to Resources: 130th | Business Costs: 153rd
- Population: ~100,000
- Neighboring #3-ranked Washington, Utah
- Key advantages: Affordable office space and minimal commute times
- Matched Washington's small-business growth rate (2017–2023)
Key Takeaways: Utah and Florida dominate the rankings, with St. George, Utah, claiming the top spot through exceptional business environment metrics. While business costs and resource access vary significantly among top performers, a favorable regulatory and operational climate appears to be the strongest predictor of small-business success in these markets.