Best & Worst Small Cities to Start a Business (2026)

Size matters when choosing a city in which to launch a startup. As many veteran entrepreneurs and failed startups understand well, bigger is not always better. A city with a smaller population can offer a greater chance of success, depending on an entrepreneur’s personal preferences and the type of business they’re starting. The best cities can even help new businesses survive economic shocks such as pandemics or inflation.

To determine the best small cities to start a business, WalletHub compared the business-friendliness of more than 1,300 small-sized cities. Our data set of 18 key metrics ranges from the growth rate of the number of small businesses to investor access and labor costs.

Main Findings

Best Small Cities for Starting a Business

Note: With the exception of “Total Score,” the columns in the table above depict the relative rank of a city, where a rank of 1 represents the best conditions for that category.

In-Depth Look at the Best Small Cities to Start a Business

St. George, UT

St. George, UT, is the best small city for starting 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).

St. George also has very cheap office space, costing around $10.73 per square foot. In contrast, the most expensive city charges nearly $62 per square foot. St. George residents have short commutes, too, at around 17 minutes on average. In addition, the city has a very high annual job growth rate. All of these factors allow entrepreneurs to minimize costs while maximizing their chances of success.

Fort Myers, FL

Fort Myers, FL, is the second-best small city to start a business, with one of the highest numbers of investors per capita in the country, which improves the chances of startups finding the funding they need. This investment access allowed the number of small businesses in the city to grow by nearly 21% between 2017 and 2023.

Fort Myers also ranks in the top 100 cities (out of more than 1,300) for office-space affordability, at $12.20 per square foot, and for the number of startups per capita. Since current businesses are thriving and have access to good capital and low building costs, it’s a great time for startups to get a piece of the pie.

Washington City, UT

Washington City, UT, is the third-best small city to start a business. It has one of the highest rates of startups per capita, as well as the fourth-highest growth in the number of small businesses between 2017 and 2023, at nearly 42%. This growth is significant because it shows that the city has the conditions to keep small businesses afloat even during this period of economic difficulty.

Washington City ranks among the cities with the lowest average commute times, too, at around 18 minutes, so people can spend less time sitting in traffic and more time being productive. It ranks in the top 100 cities (out of more than 1,300) when it comes to annual employment growth and working-age population growth. There will be plenty of people for new businesses to hire in the future.

The methodology can be found on the full version of the article on WalletHub.