Top 20 Small Cities to start a Business

With National Small Business Week approaching and over 50% of the U.S. population working for a small business, the personal-finance website WalletHub today released its report on 2019’s Best Small Cities to Start a Business as well as accompanying videos, along with its 2019 Small Business Owner Survey.

To determine the most business-friendly small markets in the U.S., WalletHub compared more than 1,200 cities with fewer than 100,000 residents across 18 key metrics. The data set ranges from small business growth rates and accessibility of financing to investor access and labor costs.

Key Stats – Small Business Owner Survey

• 24% of business owners say National Small Business Week helps their business. Business owners age 18-29 are 8 times more likely than business owners age 59+ to say that National Small Business Week helps them.
• More than 7 in 10 small business owners say now is a good time for businesses to grow.
• 23% of business owners say companies will use savings from President Trump’s tax changes mainly for executive and investor bonuses. 12% believe it will go to employee compensation.
• 84% of small business owners think the user protections on business credit cards should be at least as good as those on personal cards (business cards currently lack a number of key safeguards).

To view the full report and your city’s rank, please visit:
https://wallethub.com/edu/best-small-cities-to-start-a-business/20180/

Expert Commentary:

24% of Business Owners Say Small Business Week Is Helpful

National Small Business Week will run from Sunday May 5 through Saturday May 11 this year. But whom will it actually help? Almost 1 in 4 small business owners say the event helps their business, according to a new, nationally representative survey by WalletHub.

Small Business Week “has a great message that small businesses impact communities, families, and neighbors, but because it’s a very broad message, many people don’t know which companies are small businesses,” said Margaret King, the president of InfoRich Group, Inc., which advises organizations on how to improve their fundraising capacities. “Buyers generally buy products or services when they need them, and that may not be during Small Business Week,” said King. “I do think it raises awareness…but awareness doesn’t always translate to sales or revenue.”

Though most small business owners don’t feel particularly helped by National Small Business Week, younger owners are more optimistic. Business owners age 18-29 are 8 times more likely than business owners age 59+ to say that National Small Business Week helps them. Since today’s young business owners will have an impact on the economy for decades to come, that’s an important statistic.

Business-Owner Concerns

National Small Business Week brings the successes of small businesses to light. However, it’s also important to learn about the areas in which small businesses struggle. For example, WalletHub’s survey found that 65 percent of small business owners feel they pay too much in credit card processing fees, the fees the business is charged each time customers use credit cards to pay.

“Shop around and use your leverage,” said Daniel Cohen, the executive director of the Center for Entrepreneurship at Wake Forest University. “You have nothing to lose. Also, experiment with accepting other forms of payment such as Venmo, Pay Pal, etc. My advice is to generate multiple ways that customers can pay you. These costs ultimately get passed down to customers anyway.”

Staffing vs. Customer Acquisition

As technology advances, small business owners can find more and more innovative ways to accept payment from their customers. And they can bring in tech-savvy younger staff who will be able to more easily adapt to modern business practices. In fact, small business owners aren’t especially worried about finding good workers. They’re twice as likely to say their biggest frustration has to do with marketing and acquiring new customers, according to WalletHub’s survey.

“A business is nothing without paying customers,” said Tommy White, executive-in-residence and co-director of the entrepreneurship incubator at American University. “However, customers are being bombarded with scores of ads and communications every day and are becoming numb to the messaging. Small business owners must put in the time and resources to innovate and test new ways to reach their customers.”

White went on to describe the ideal ratio of resources businesses should spend on acquiring good workers versus advertising to customers. “Staffing is often considered an afterthought with small business owners, something that will ‘take care of itself’,” said White. “This is a huge mistake. Spending the time up front identifying and recruiting quality staff will bring productivity rewards at 10x. Too often small business owners spend 80 – 90% of their time on their product and service and only 10 – 20% of their time on customer acquisition. A successful business should be split 50 – 50 between the two.”

Business Credit Card or Personal? 

One other big issue for small businesses is whether to use a business credit card or personal credit card for company spending. According to WalletHub’s survey, 7 out of 10 small business owners have used a personal credit card for business purposes. This is perfectly legal but can lead to messy bookkeeping if personal charges are also on the card.

“It is really not a good idea to combine personal and business accounts,” said Robert N. Lussier, an author and professor of business management at Springfield College. “Even if you are a sole proprietorship, unless you have very few business transactions, keep two separate sets of accounts. Have a separate checking and credit card account for your business. The two accounts can be personal and free of charges; if they are cheaper than business accounts, so long as you only use one for business.”

Small business owners and their employees provide an enormous benefit to the U.S. economy, so it’s important to support them not just during National Small Business Week but all throughout the year. And though many small business owners think the week honoring them isn’t particularly helpful in terms of sales, there are still plenty of resources and events that they should consider taking advantage of.

The centerpiece of this week is the National Small Business Week Awards, which recognizes outstanding businesses nominated from across the country. Other events include a virtual conference to help business owners meet each other and learn more about topics of their choice, hackathons to solve business problems and more.