A new analysis from WalletHub ranked over 1,300 small U.S. cities to determine where startups have the strongest and weakest conditions.
Top cities for starting a business
St. George, Utah ranks as the best small city to start a business.
It leads due to:
- High startup growth per capita
- Lower operating costs
- Short average commute times
Following St. George, the top cities include:
- Fort Myers, Florida
- Washington, Utah
- Bozeman, Montana
- Greenville, South Carolina
These cities combine lower costs with steady business growth.
Worst cities for starting a business
Pacifica, California ranks last in the study.
The bottom 10 cities are all in California, including:
- Danville
- Castro Valley
- Saratoga
- Belmont
Higher costs and tighter operating conditions drive these rankings.
What the rankings measure
WalletHub evaluated cities across three core areas:
- Business environment (growth, revenue, commute times)
- Access to resources (investors, talent)
- Business costs (rent, labor, taxes)
As a result, cities with lower overhead and better access to resources ranked higher.
Why small cities are gaining attention
Smaller cities often give new businesses an advantage.
Lower rent, fewer regulatory barriers, and tighter local networks make it easier to launch and scale early-stage companies.
However, smaller markets also limit reach and can create distribution challenges.
Bottom line
Location directly impacts startup success.
Cities like St. George offer lower costs and faster growth conditions.
In contrast, high-cost markets like parts of California create more barriers for early-stage businesses.
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