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Big business can happen in small towns. Small towns offer a unique opportunity of a concentrated market… as well as the challenge of a limited population. Finding small town business ideas that will stick is all about meeting a current demand with a great product or service.
Starting a business that works in a small town requires background research into the local market, as well as the specific geography of the physical location. In a small town, you’re much more dependent on a smaller group for business, so choosing the right location is crucial to optimize store traffic. Even if your business plan is service-based, it’s still a good idea to have a firm grasp on how big your market is.
Get an idea of the consumer marketplace in your town so you can lay the groundwork for a successful business. Once you find out more about the resources available and businesses in your area, and you have a chance to talk to other business owners, you’ll be able to evaluate the costs and requirements of starting a business in a small town—then you can check out our 13 small business ideas that every community needs, and see if one of those ideas sparks some inspiration.
Starting a small town business requires careful research and understanding of your community. Once you have a sense of the existing businesses in your area and local demand (more on that below), you’re ready to decide which enterprise is right for you—and the community.
Try to find an industry or service where profitable small businesses, the community’s needs, and your own interests intersect. Here are a few small town business ideas to inspire you:
Diner, fine dining, or somewhere in between, a successful small town restaurant is all about providing people what they want, but don’t already have. It might be tempting to copy a popular place in town, but consider catering to a need—or desire—that locals can’t find nearby, and an attraction worth traveling over from the next town.
For example, farm-to-table restaurants are a great idea, but if you’re not in an agriculturally rich area, or that already exists in your town, consider an alternative. Think about what your family looks forward to when leaving town. Maybe it’s the experience of an elegant meal, or maybe it’s a slice of New York-style pizza, but there’s a good chance there’s a market for a new restaurant. You just have to figure out what people want—and will eat.
Make up for slower business traffic by serving the beverages people want all day. If coffee shops aren’t a “thing” in your town, serving coffee all day at place where people do go—like a bar—can slowly start to normalize the activity, and encourage crossover business. A local small-town bar might be your dream business, but a coffee shop can start bringing in money at sunrise—there’s no need to compromise, as long as you create an environment that works for both day and night.
Depending on county laws and state taxes, opening a liquor store can be a lucrative small town business. Particularly in areas where grocery stores aren’t permitted to sell alcohol, liquor stores control the alcohol market in small towns.
A good handyman will always be in demand. If you’re frequently getting calls from friends, family, and neighbors to come take a look at a leaky pipe or wobbly board, you might be well on your way to starting a small-town business that works.
Starting a contractor service will be relatively straightforward if you already work odd jobs, and have an idea of who will hire you. If people in the area are unfamiliar with your work, try to get in touch with a general contractor who’s willing to offer a small project, and hopefully pass on your name to future clients. In a word-of-mouth business like service work, repairs, and construction, the people you already know, and who know your work, are your strongest salespeople.
You’re pretty much required to have a car if you live in a rural area, but being far away from a dealership can make routine servicing a hassle. Auto repair services fill an obvious need for small towns, and make life more convenient for locals, so consider whether there’s opportunity in your town to open up shop.
Likewise, cars break down everywhere, and most tow trucks charge per mile. So, if your town is a significant distance between major cities, there might be an opportunity for your to start towing cars—even if you don’t have a proper repair shop.
Some people just don’t like to clean, and there’s a good chance a few of them live in your town. This is another service that benefits from a word-of-mouth referral system, and can even be paired with other services, like babysitting or yard work. Expert cleaning is a valuable skill, but not one that requires you to spend tons of money on courses or certifications, so this a great option if you’re looking for a side hustle with low overhead.
All businesses and individuals need technology support, wherever they’re located. No matter how big or small the town, there will always be folks using technology… and having trouble connecting their WiFi.
This service will require slightly more advertising to get the word out, since it’s less visible than a business with a storefront, and less regular than a service like house cleaning. But if you don’t plan on doing major repairs, it won’t require much in the way of equipment, so you’ll keep overhead costs low too.
Opening a pet store in your town is a great idea if there isn’t already a local supply shop or large chain store like PetSmart or PetCo. Depending on the pet population in your area, there might be demand for pet grooming and boarding services.
If you’re interested in opening a pet store or pet service business in a small town, ask local pet owners you know where they currently get their food and grooming. An existing pet shop owner in your town might also be a good resource, if you’re interested in offering grooming, walking, or boarding services.
Chances are, your town has at least one barbershop or salon, but that might actually help you if you’re looking to open a successful small-town hair salon. If one demographic is underserved—i.e. there’s only a barbershop that caters mainly toward men—figure out whose hair needs aren’t currently addressed on Main Street.
If your town is already served by hair salons and barbers, there may be a market for a nail salon or beauty parlor that offers additional services, like small spa treatments or massage.
They may not be the most glamorous businesses, but filling stations are absolutely essential in communities where most people rely on cars and trucks for transportation. Small towns located on or near major highways can get considerable through-traffic, and unlike most businesses, a gas station might actually benefit from a location far between cities. Lottery and tobacco sales can also generate substantial revenue, especially you’re the only vendor in the area.
When a town that could sustain a grocery store doesn’t have one, there’s a probably good reason—maybe most people commute every day and use other stores, or there isn’t a large enough population to support a big box chain.
If you want to go the independent route (i.e. not open a franchise store), try to find a way to specialize your store so that you don’t overspend on a huge inventory. Use local products, trends, and tastes to help inform this decision.
In agricultural areas, farmers-market style stores that carry local produce and seasonal goods are usually popular with both locals and tourists. A town that already has a major chain grocery store, but few available options for organic, local, or vegan choices, is a great candidate for a specialty food store.
A drugstore or pharmacy requires more legwork—from hiring a pharmacist, to buying insurance, to installing security precautions—but if your town isn’t locally served by a pharmacy, it could be a great opportunity to open a long-lasting business in your community.
This idea might be a good option for individuals who are trained pharmacists themselves, or involved in the local medical profession. A pharmacy is definitely an essential business in every community, but if you decide to open an independently-owned pharmacy, be wary of competing with large chain drug stores.
Particularly in touristy areas, quaint gift shops can turn a profit on finds from local flea markets, junk yards, and estate sales. While turnover for an antique store may be slow, your inventory won’t expire or require much upkeep. If there are several shops like this in your town already, you might consider specializing, for instance in retail consignment and second-hand clothing, or artwork from local craftspeople.
The sooner you get involved in your local business community, the more informed you’ll be about local consumers’ needs and opportunities—and the sooner you can determine what kind of business to start in your town. Other entrepreneurs in your area, or contacts in similar markets, can give you insight into how to best estimate local demand and costs of doing business in your area.
Yes, the absence of competition definitely makes opening a business in a small town attractive—but remember that a smaller population means you’ll have to work harder to stay busy. Local preferences are often a major influence on commercial activity in small communities, so really focus on finding out what people want. Reach out to small business owners you already know, or tap the owners of local businesses where you’re a frequent customer and ask them to share their tips about consumer behavior. If you’re scouting business prospects in a different community, visit and talk to the locals as much as possible.
To figure out what kind of business you’re interested in, begin assessing the local business market. Start by looking at local demand for goods and services, potential locations, and costs of business in your town, and then consider the different types of retail and service vendors your town doesn’t have yet. From there, you’ll be able to pursue local resources for small businesses.
As the only [fill in the blank with your great idea here] business in town, you’re in a position control the local market share—which is fantastic, as long as there’s demand for the goods or service you offer. As important as it is to set your business apart, it’s also crucial to fill a need within the local community. So, think about the kind of business people in your town want—and can support.
On the other hand, you might consider whether your immediate community is truly the optimal location for a new business. It’s possible that a nearby town has a greater need for certain businesses, or a larger population that can support multiple vendors.
In a small town, particularly one with a static population and little visitor traffic, generating and sustaining demand for your business is crucial to staying in business. So, the ideal small town business is both essential to the business community and offers something consumers can’t find locally.
Explore the town you have in mind for your new business—even if you’ve lived somewhere your whole life, try to approach the business community objectively. Take note of locations where businesses have been successfully operating for years, as well as areas that have struggled to support business. Observe traffic patterns around any potential properties, as well as factors like visibility and neighboring businesses already attracting customers to a particular area.
Picking a business based on what you’re good at or have experience doing makes sense, especially if yours will be the only business like it in town. But while the lack of direct competition in a small town can be a benefit, you might lose the opportunity to learn from other, similar businesses if you’re the black sheep. To make up for it, seek out entrepreneurs you know locally, and work on building a group of peers you can consult for advice.
The first thing to consider about starting any new business is the cost—for the property, utilities, inventory, equipment, and employees—and how much capital you have right now.
Luckily, the costs of running a business in a small town might actually be lower, depending on taxes, real estate prices, available workforce, and cost of labor in your area. Rural locations often have lower rent prices than cities, too.
But keep in mind that shipping and transportation costs can get expensive, especially if you’re in a remote location. It’s also important to consider accessibility to transportation and local cost of living when estimating your cost of labor.
Find out which corporate taxes would apply to a small business in your town, and look into any government on community incentives, either in the form of tax breaks or startup funding.
If you’re thinking about opening a business in a small town, first take the time to understand the businesses already operating in the community, and investigate local demand for new stores or services. Joining groups and talking to local business owners is a great way to start your search for an optimal business idea and location.
Essential goods and services—like restaurants, gas stations, and pharmacies—are probably the safest choice for a small town businesses. But with the right planning, it’s possible to be successful with more original business ideas. Regional industry or tourism might provide an opportunity for a niche service, like farming equipment repairs or a store that sells local specialty goods. Tapping into local resources can also help you integrate with other vendors and service providers in your town, and form a mutually supportive business network.
Chain stores and online marketplaces tend to drive costs down, making it difficult for smaller businesses to make a profit. In order to drive enough business to keep up with low costs of large retailers and the convenience of online shopping, local small businesses have to provide higher quality of service.
Extra services like free delivery and rewards programs are ways a small business can optimize customer experience to compete with larger stores and lower costs. Even if you can’t match online prices, consumers are often willing to paying higher prices for convenience and great service—especially if your customers are also your neighbors.
Because in small communities, personal relationships play a major role in business, and might even determine how profitable you are. Get involved with the closest chamber of commerce, or research funding opportunities specific to your area. Search online for business incubators, accelerators, and tax incentives by your geographical location.
It always helps to have contacts in a local community. But don’t worry if you’re new in town—you can still find the resources you need to start a successful business in your new community. Learning more about the local business environment from other entrepreneurs will help you figure out how much financing you need, so you can seek out the appropriate startup funding sources and financing options available to rural business owners.