5 Under the Radar Cities for Small Business

It seems that we’re always reading about startups and entrepreneurs in the business world these days; and small, independent businesses are indeed a critical component of our economy. According to Forbes, more than half of the working population of the U.S. works in a small business (defined as those with less than 500 employees).

More than half a million small business start up every month in the U.S., but half of those will be out of business in five years. There are many factors that influence success, and many of those are determined by location. Some places have the ideal mix of low cost of living, vigorous growth, stable economy, and business-friendly government that can nurture a new business and help it to thrive.

There are powerhouse cities that we can all recognize as favorable to small business. Places like New York, Chicago, and Los Angeles have a rich pool of talent that encourages the growth of entrepreneurship, particularly in the technology sector. But many sources listing the best cities for small business name places that don’t immediately come to mind. These under-the-radar cities are proving to be fertile ground for small business development, thanks to a variety of beneficial attributes. Here are 5 of the strongest contenders:


The Country Music Capital is home to a creative population that loves to innovate. Thanks to a low tax burden for business and a very reasonable cost of living (median home price is just over $165,000), small businesses are finding a welcoming home in central Tennessee.

The area is a center for health-care companies, technology firms, and distribution centers, and has 21 accredited four-year institutions, providing an ample supply of talent, with more than 40% of its population having at least 1 year of higher education.

Oklahoma City

Touted by CNN Money as the best place to launch a startup, this state capital has seen an increase in small-business lending in recent years. Along with a low cost of living, fairly low income taxes, Oklahoma City can help keep new businesses in the black. The city’s government also makes it easy to get started: filing the paperwork for a new business can be completed in a single day.

Kiplinger also favors Oklahoma City, noting that there are 148 small businesses per 10,000 people there.  While the tax situation is not ideal, this is one of the country’s most affordable city, and business costs there are 4.9% lower than the U.S. average.


The most affordable city on this list, Omaha (that’s in Nebraska) has a cost of living more than 12% below the national average. There are more than 12,000 small businesses here, with a population of under 1 million.

A well-educated populace has helped make Omaha part of the emerging “Silicon Prairie”, with tech start-ups a growing segment of small business starts.  There is a lot of institutional support for small business in Omaha, with help coming from small business accelerators and the Omaha Small Business Network. Mentors come from the area’s Fortune 500 companies: ConAgra, Berkshire Hathaway, and Union Pacific Railroad.

Raleigh, NC

Larger corporations are also helping to mentor small business start-ups in this corner of the Southeast’s Research Triangle.  Their influence, along with talent for 4 major universities in the area, has resulted in a wealth of development in the areas of technology and life sciences.

Local tax law is very friendly to small business, with legislation like the William S. Lee Quality Jobs and Expansion Act, which provides tax credits to businesses that create jobs, train workers, and conduct research.  There is also no local income tax for residents.


The Mile-High City is home to 172 small businesses per 10,000 people, and is especially attractive to tech and medical devices firms. The city’s Small Business Development Center helps integrate new businesses into Denver’s collaborative community. Other area agencies provide short-term leases, advisors, and job opportunities.

Business costs in Denver are well below the national average, and the state provides attractive incentives to business owners for job creation.

Each of these cities is a relatively affordable place to live and work, has low unemployment (all are at around 4%), and includes business-friendly policies in local government. Another encouraging factor seems to be the presence of higher education institutions providing talent and mentorship from larger corporations. An address in Omaha may not have the glamour of a Manhattan location, but you may be able to keep it longer.