10 Best Small Cities to Start a Business

City size is key when launching a startup, according to WalletHub’s 2026’s Best Small Cities to Start a Business report.

WalletHub determined the most business-friendly small markets in the U.S. by comparing over 1,300 cities with fewer than 100,000 residents across 18 key metrics. The dataset includes small-business growth rates, financing accessibility, investor access, and labor costs. WalletHub ranks the top 10 best small cities to start a business as:

1. George, Utah
2. Fort Myers, Florida
3. Washington, Utah
4. Bozeman, Montana
5. Greenville, South Carolina
6. Cedar City, Utah
7. Boca Raton, Florida
8. Cheyenne, Wyoming
9. Ocala, Florida
10. Dover, Delaware

St. George, Utah, is the best small city to start a business, ranking among the top cities in the country for both startups per capita and growth in the number of small businesses (nearly 42% between 2017 and 2023). The city also has very cheap office space, costing around US$10.73 per square foot. In contrast, the most expensive city charges nearly $62 per square foot. In addition, St. George has a very high annual job growth rate.

“The benefits of starting a business in a small city include lower overhead costs, stronger relationships with customers and the potential to become a big fish in a little pond. But there are drawbacks, too,” said Chip Lupo, WalletHub analyst. “Entrepreneurs who want to build a large professional network aren’t likely to make as many connections in a town with fewer residents. Other restrictions might include limited industry options, a less diverse customer base, and difficulty attracting and keeping top talent.”

Other key findings from the report include:

• Bozeman, Montana, has the highestnumber of startups per 100,000 residents, 8.7 times higher than in Austin, Minnesota, which has the lowest.
• Kentwood, Michigan, has the most affordable office spaces, which are 6.8 times lower than in Mountain View, California, the city with the least affordable.
• Isla Vista, California, has the lowest labor costs (according to median annual income), which are 9.6 times lower than in Los Altos, California, which is among the cities with the highest.
• West Odessa, Texas, has the longest work week, which is 1.8 times longer than in Isla Vista, California, the city with the shortest.
• Wellesley, Massachusetts, has the highest share of the population with at least a bachelor’s degree, which is 14.8 times higher than in Immokalee, Florida, the city with the lowest. 

To view the full report and the ranking of over 1,300 cities, click here.