Starting a successful small business looks very different depending on whether you open in a large city or a small town. Entrepreneurs in small towns may benefit from less competition and enjoy lower costs of living and real estate than in urban areas, according to SCORE. A small-town business may also be more visible than one in a big city, and it can provide a unique opportunity to serve a collective need.
On the flip side, any competitors that do exist compete for a smaller pool of customers — plus, depending on the town’s size, there may not be enough demand to make a business profitable. Before you start your business plan, it’s important to research whether your small-town business idea is a good fit for the area.
15 small-town business ideas
While not every small business idea is right for all towns, certain types of businesses tend to do well in smaller towns or be in demand in locations of all sizes. If you have an entrepreneurial spirit but aren’t sure how best to channel it, consider these ideas to start a small business.
1. Coffee shop
A hot cup of coffee never goes out of style, and in some towns, the local coffee shop serves as a community hub and meeting place. Coffee is a multibillion-dollar industry, given that 7 in 10 of American drink it weekly (and 62% do it daily), according to the National Coffee Association. The beauty of a locally-owned coffee shop is that each one is different, so it’s easy to add offerings that set you apart from other nearby businesses.
2. Food truck
Once a trend in major cities, food trucks are now found nationwide — it’s a $2 billion-plus industry, according to the U.S. Chamber of Commerce. Some park permanently in food truck parks, while others are mobile and rotate locations. Food trucks require less financial overhead and ongoing costs than restaurants, and their mobility makes it easy to sell at events or move as foot traffic varies. Some entrepreneurs use food trucks to build their brand’s popularity before venturing into a brick-and-mortar restaurant. Just be aware that increased competition and regulatory barriers are causing the industry to slow, so it’s important to find ways to set your business apart and ensure you can navigate the process of obtaining required permits and licenses in your area.
If you have the financial resources, you could open a cafe or restaurant — especially if you can set it apart by offering a type of food no other local eatery serves. For example, if your small town doesn’t have a good breakfast spot, or it lacks an Italian restaurant, you could fill a gap. Restaurateurs can also find revenue in hosting events on-site or catering local events.
4. Pet care
Market reports expect the pet care industry to see growth of nearly 6% globally between 2020 and 2026. As more Americans adopt pets and view them as family members, they’re more willing to pay for products and services like dog walking, pet sitting, grooming and upscale accessories and food. This could create an opportunity for entrepreneurs in small towns with plenty of pet owners but few services available for them.
If your funds are limited, you don’t necessarily need to create a doggie day care center or brick-and-mortar boutique; you could offer pet sitting in your home or run a mobile dog grooming business.
5. Child care
Child care is a necessity for many parents, though it can come in a multitude of forms. These can range from in-home individual care or small home-based day care to day care centers. If your small town doesn’t offer a certain type of child care or doesn’t serve a certain age group, that could be an opportunity for you. Furthermore, demand often exceeds offerings, even in rural areas. One option is to open a small day care in your home, though be aware that some states require a license and may limit how many children you can watch.
6. Home health care
As an increasing number of baby boomers choose to age in place, there’s high demand for home health care services. In fact, the U.S. Bureau of Labor Statistics notes home health care as one of the fastest growing industries in the country. If your small town has an older population, you could find success by either running your own home health care agency or providing in-home health care services yourself.
7. Cleaning service
Businesses always need professional cleaning services, even more so in the wake of the COVID-19 pandemic. If your small town doesn’t have many offerings, you could provide either residential maid services or janitorial services for local businesses (or both if you have the staff). You could also capitalize on the trend of “green cleaning,” using environmentally-friendly products. Some large cleaning companies offer franchise opportunities, if you find that easier than starting from scratch.
Every small town needs a bar — it’s a gathering place to talk about the day’s news or catch up with an old friend. The longer a customer stays, the more money they spend. Find out what’s missing from your local bars and incorporate the gaps into your business plan. For example, maybe the small town lacks a bar with an outdoor playground that kids can use while parents have beer and food. Or maybe there’s a local watering hole, but nowhere that offers televised sports or billiard games.
Repair services large and small are needed in towns of all sizes, and this industry has grown and is expected to grow steadily over the next few years. You could see if your town lacks repair services, or if the existing services don’t cover certain needs. For example, perhaps there’s already someone savvy with electrical work, but nobody nearby who offers painting or fence repairs. There are also handyman service franchise opportunities available.
10. IT/computer repair services
We’re more dependent on technology than ever, but many older adults are still not very comfortable with digital devices. If you’re skilled at repairing computers or phones, or setting up electronics, you could provide these services in a small town. Note, though, that this industry is expected to slowly decrease in demand as consumers become more likely to replace devices than get them repaired. Still, offering these services could make sense if they’re not available elsewhere in your town, especially if there’s a significant older population that could use tech support.
11. Grocery store
While some small towns may already have an established grocery store, others don’t and require residents to drive a long distance to obtain fresh, healthy food. If your small town is in a food desert, opening a local grocery store can provide not only a solid small-town business opportunity, but a much-needed service to your community. According to the Center for Rural Affairs, a grocery store is among the most important businesses in a small town.
12. Beauty or hair salon
Small-town hair salons remain an important staple for communities. Every town needs a place where locals can get their hair cut or nails done, and it can sometimes serve as a social hub. If a local salon already exists, you could offer services they don’t, such as waxing, tanning, lash extensions or event makeup. The best ways for small hair salons to succeed are to establish effective marketing and repeat customers, according to industry analysis from Dun & Bradstreet.
13. Gas station or auto repair shop
There’s no denying that every small town needs a gas station and an auto mechanic. If you’re thinking about opening an auto shop, you could expand your concept to include one or two gas pumps. Even if there is a gas station in your town, being able to offer additional services, such as car washing, can increase your return on investment.
If you have a teaching background or expertise in a certain subject, but you’re not interested in teaching, you could establish a tutoring business for your town’s students. Find out if any tutoring services exist and if any subjects or age groups are left out. Whether you’re an expert in coaching kids through math problems or enjoy helping high schoolers write papers or study for the SATs, you could establish yourself as an expert tutor.
15. Bed and breakfast
Many tourists enjoy visiting quaint small towns and staying in bed and breakfasts, so if your area doesn’t have many accommodation options, you could open a B&B. This can come with significant overhead and zoning permits, plus other permits for serving food. But it could pay off if you’re near a desirable town or tourist destination, or if there are many residents who don’t have a local hotel or B&B to point visiting relatives to.
Choose a small-town business idea that will stick
Before you settle on a small-town business, it’s essential you confirm it’s the right fit for the area and that you’re financially, logistically and legally prepared. Here are questions to consider as you weigh your options:
- What is the demand like in your town? Maybe your dream is to open a hair salon. If there are already three in your area, there may not be enough demand for another one. Consider what existing problems exist in the town that your business could solve. If you want to open a business that is similar to one that already exists there, how can you set yours apart with different services or a different target audience?
- What are your location requirements? Think carefully about whether you’ll be able to open a business in the type of location that’s necessary for that type of business. For example, will you need heavy foot traffic, plenty of parking space or a business with a commercial kitchen?
- What are the legal requirements? Depending on the business idea, you may require a combination of local and state permits and licenses. You may also need certain types of training or certifications. Make sure to find out what’s required and if it’s possible.
- Can you afford to fund the business? Research to find the typical startup costs of your chosen business and assess whether you’ll require financing, such as a small business loan.
Resources for small-town business owners
The thought of starting a new business may feel overwhelming, but there are plenty of resources for new entrepreneurs. In addition to connecting with your area’s chamber of commerce, here are some resources to utilize as you consider small business ideas for small towns:
- SCORE: SCORE is a national nonprofit that provides business education and access to a free mentorship network. Small business owners can often work with mentors in their area and participate in events and training sessions to help develop their businesses.
- Small Business Development Centers: SBDCs are located nationwide and offer free business consulting in partnership with the U.S. Small Business Administration. SBDCs also offer free or low-cost training, plus guidance on accessing capital, navigating regulations and more.
- Networking events: It may be helpful to connect with other small business owners in your industry or area. If you’re not able to find any through the above organizations, look for relevant networking opportunities on events sites, such as Meetup or Eventbrite.
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Guest Author: Emily Starbuck Gerson is a freelance writer with 12 years of experience covering credit, debt, small business and other personal finance topics. She has held staff writer positions at CreditCards.com and NerdWallet, and her financial writing has appeared in dozens of publications, such as Business Insider, USA Today, CNBC, Consumers Digest magazine.