Best small cities in the U.S. to start a business

Meet me in Alpharetta

Where you set up shop can be a major factor in the success of your small business. If competing in a big urban area isn’t your thing, which small cities are your best bet?

nerdwalletNerdWallet looked at 463 small cities — those with populations of 50,000 to 100,000 — to find the best small cities to start a business.

The results: Of the top 10 spots, eight are near major metro areas, including Seattle, Minneapolis and Washington, D.C. Wisconsin is the only state with more than one small city on the top 10 list: Waukesha and La Crosse. California is home to five cities in the top 25.

Of course, location isn’t everything when it comes to having a successful small business. Before you choose the perfect spot, you’ll want to have a plan for financing. Finding the right small-business loans from an online lender or traditional bank is often necessary to grow your business. Once you have a loan, you can purchase new equipment, hire extra help, and renovate or otherwise expand your business so it can prosper.

Beyond financing and location, successful small businesses also need to find their niche. Our study revealed that some of the fastest-growing industries, such as technology and financial services, have found homes in smaller cities. At the top of our list, for example, is Alpharetta, Ga. This city, located outside Atlanta, has a flourishing tech industry. Alpharetta also boasts high average revenue per business and a large number of businesses per 100 people.

Top 10 small cities for starting a business

Without further ado, here are the top 10 small cities in America for starting a business.

Rank City Avg. Annual Revenue Per Business Businesses With Paid Employees Businesses Per 100 People
#1 Alpharetta, GA $6,908,899 36.45% 15.07
#2 Redmond, WA $7,351,911* 35.85% 11.33
#3 Wilmington, DE $6,755,492 42.18% 11.94
#4 Troy, MI $2,913,262 39.07% 13.07
#5 Minnetonka, MN $2,954,698 32.27% 15.75
#6 Waukesha, WI $4,874,283 37.60% 6.75
#7 Newport Beach, CA $1,965,213 30.95% 21.33*
#8 Bethesda, MD $1,660,397 28.85% 15.63
#9 Greenville, SC $1,874,514 37.38% 15.63
#10 La Crosse, WI $2,709,859 43.91%* 5.94

* Highest rank in this category on the top 10 list

Methodology

To determine the overall score, NerdWallet analyzed the business climate and economic health of 463 places in the U.S. using data from the U.S. Census Bureau. Each of the places has at least 500 businesses and a population of 50,000 to 100,000. This list doesn’t include 25 cities that were missing data.

The overall score is based on metrics from the U.S. Census Bureau’s Survey of Business Owners, including average revenue of businesses (20%), percentage of businesses with paid employees (25%) and businesses per 100 people (20%).

The rest of the overall score is based on three metrics from the U.S. Census Bureau’s American Community Survey, including median annual income (10%), median annual housing costs (10%) and unemployment rate for residents over 16 years old (15%).

Image by: Alpharetta CVB via Compfight cc

Anna Helhoski
Anna Helhoski is a staff writer at NerdWallet, which provides clarity around decisions that help you start or grow your small business. NerdWallet aims to provide clear, unbiased information, entrepreneur-focused advice, and tools for small-business loans, tax and legal issues. They also connect you with experts who can answer questions about growing your small business.