What Are the Best Businesses to Start in a Small Town?

Successful Small Town Business Ideas

Being a business owner in a small town has its own very unique set of challenges — and its own unique opportunities.

A small town business needs to serve its community, to meet the needs of its neighbors and to reflect local values in a way that might not be important in a big city. But if you can find common ground between local values and community needs, you can earn yourself lifelong customers.

Below, we will explore what to keep in mind when building a business on that equilibrium between values and demands at the local level. Then, we’ll look at some business models that tend to thrive in small towns.

A Small Town Can Mean More Business Opportunity

The Houston Chronicle has an excellent library of reporting its staff has done on building a small business. Chronicle reporter Chris Joseph notes that in small towns, population sizes don’t necessarily restrict business opportunities. In fact, a lack of competition can mean you’re in a position to claim a larger share of the local market.

Competition or not, though, the best business idea must serve a real need, he writes. The best way to figure out what those needs are is to know the community. If you’re a newcomer, it might be a good idea to speak to the local Chamber of Commerce or other town officials to understand what pressing problems residents have.

Finally, Joseph advises would-be entrepreneurs that it takes time to earn a community’s trust. “A town where residents have been going to the local diner or coffee shop for decades may not be receptive to a new gourmet coffee shop,” he says.

More on that coffee shop comment in a moment. First, it’s worth thinking about numbers, specifically expenses. In small towns, expenses tend to be less than they would be in a bigger city, so that can make startup costs and overhead costs cheaper.

Take Lucky Orange, a software company in Overland Park, Kansas. Now, Overland Park isn’t a small city, but it’s certainly much more affordable than a place like New York or San Francisco. And with a software company, you aren’t really restricted by geography — you can sell to anyone anywhere.

So, to Lucky Orange co-founder Danny Wajcman, it made financial sense to set up shop in suburban Kansas City. “Had we launched in Silicon Valley, would we have been able to afford an office space large enough to accommodate our staff?” he writes in Forbes. “Would we have had the same opportunities available to us that we have here? Could we have amassed our first 6,000 users — major corporations included — using just word-of-mouth marketing in New York City?”

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5 Types of Businesses That Find Success in Small Towns

No business model is going to guarantee you success, but some tend to thrive in small towns. Here are five reliable small town business ideas.

1. Coffee Shops

Despite the earlier warning, small towns are happily embracing cafes that specialize in delicious gourmet coffee. It’s not because these coffee shops are taking business from established local favorites. Instead, these cafes are complementing existing institutions by giving locals another place to gather, chat and ultimately express an aspect of the community’s collective identity.

That might sound abstract, but make no mistake: A community of local coffee-lovers is a powerful force. Just ask Baxter’s Coffee in Somerset, Kentucky. Baxter’s is a family-run chain that started as a single storefront in 2001 and has since grown into four area locations.

The concept is simple enough: Make great coffee, and sell it to people with cheerful, attentive service. That concept was put to the test, however, when Starbucks opened up a cafe in 2006. Just as big-box retailers had forced the shops downtown to close, Starbucks would cannibalize the town’s home-grown coffee retailer, right?

Not at all. Baxter’s had earned enough community loyalty in the five-year head start it had on Starbucks, and the Seattle retailer was no match. By the summer of 2008, the Starbucks folded. Baxter’s continues to grow, too, having most recently opened a roastery and drive-thru down the street from its original location.

2. Pet Services

Americans love their pets, and they’re spending more and more money on pets each year. According to the American Pet Products Association (APPA), the pet industry in America grew from $60.28 billion in 2015 to $66.75 billion. Expect that number to grow, too.

The opportunity growth in this industry extends to small town and big cities alike; beloved pets are found in homes everywhere.

As such, there are a number of ways to cater to those pet owners’ needs. Yamarie Grullon at Shopkeep has a few suggestions:

  • Pet boutiques
  • Pet sitting services
  • Pet daycare
  • Pet grooming
  • Pet clean-up services (“You can make a surprising amount of money running a poop scooping service in your area,” Grullon writes.)

APPA says that the growth in pet businesses stems largely from millennials coming of age. That generation is especially fond of pets, which means pet businesses have significant potential in the long run.

main-street | small town business

3. Growing, Distributing or Selling Organic Produce

Agriculture doesn’t support rural communities the way it once did, but organic farming creates valuable business opportunities for small town entrepreneurs all along the supply chain.

If you’re close enough to farmland, you can cultivate crops and raise animals using organic methods. Research shows that in counties where organic farming is a major focus, median incomes across the community tend to be higher. If farming isn’t for you, you could distribute organic produce to nearby urban areas, the team at 99 Business Ideas writes: “Supplying fresh agricultural and farming produce to urban areas is a profitable choice for entrepreneurs in small towns and rural areas.”

Alternatively, you could serve your community directly by opening up an organic produce shop. You probably won’t be able to compete with big-box retailers and grocery chains, but with a little creativity you can come up with a business model that meets the local demand for organic foods (and introduces healthier options into your community).

Kendra Rasmusson in New Prague, Minnesota, has found a model that works there. Her shop, Farmhouse Market — which specializes in local, natural and organic foods — sells memberships that give customers 24/7 access. Those members can swipe a keycard to get in and to operate the self checkout, which gives members incredible convenience while saving Rasmusson on staffing costs. Farmhouse Market also has public hours during the day so that non-members can shop there.

4. Children’s Clothing Shops

Another evergreen industry is children’s clothing. Kids outgrow and wear out clothes at an astonishing rate, which means parents across the country often have to invest money each August to get their kids ready and properly attired for school.

So, if you can help those parents get the clothes they need and save some money in the process, you can tap into a healthy market. One way to do that is with a consignment children’s shop, Nicole Fallon at Business News Daily says.

“Everyone’s looking for a way to save money, and what better way than to buy your kids’ clothes for less and sell their old clothes back?” she writes. “Kids consignment shops can include baby equipment, clothes, furniture and books. Best of all, the inventory is cheap and, in most cases, you don’t have to pay for it until the items have sold. For the cost of the monthly rent and a marketing plan, you could be in business in no time.”

5. Lawn Care and Landscaping

Small town homeowners have one thing in abundance that you won’t find in larger cities: Lawns. And managing a big yard is an ongoing responsibility that some people simply don’t have time for. That’s why lawn businesses can always find a market in small towns.

Mindy Lilyquist at The Balance has a few reasons why this translates into a great business opportunity:

  • You can count on recurring revenue (at least in the warm months) because people need their lawns mowed weekly.
  • You have frequent opportunities to upsell services, whether that’s weed treatment, soil nourishment or pest control.
  • You can scale your menu of services and your customer base relatively easily.
  • You don’t have to invest in much training when hiring employees.

What’s more, you’re not likely to find a more merit-based industry: Do good work, and you’ll find happy customers who will keep hiring you and refer you to their neighbors. That’s precisely the lesson that Michael Rogers, owner of Kathleen’s Lawn & Ornamental Pest Control in Georgia, has learned after decades in the business.

The business model is simple, Rogers tells Landscape Management magazine: Take care of customers’ soil so that the lawn grows healthily, emphasize quality work over fast work, respond to problems quickly and give people a $25 gift card for a referral.

The result? Kathleen’s customers remain loyal: The company boasts a 98-percent retention rate, a number that’s unheard of in some industries.

And if, after you get your small town business going, you find yourself needing business storage, Extra Space Storage has you covered. We’ve got locations across the country – and in many small towns.

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