July 27, 2015 3 min read

Think your business has to “make it” in the Big Apple or Chi-Town to pull in big dollars? Think again.

Top lines thrive in small cities, according to a report released today in a partnership between personal finance site NerdWallet and Entrepreneur Media. In the study, analysts reviewed 463 cities with populations from 50,000 and 100,000 to find some of the best climates in the country for entrepreneurship.

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The analysis looks at business environment, reviewing average revenue per business, the number of businesses, and the percentage of businesses with paid employees. Researchers also studied economic factors like annual income, housing costs and unemployment rate data from the U.S. Census.

Careful review of these factors drove cities like Alpharetta, Georgia, with a population of approximately 60,000 to the top of this list. Other top small cities include Redmond, Washington and Wilmington, Delaware.

The takeaway for entrepreneurs? Keep your costs to operate in mind. While the average revenue per business among the top ten largest cities by population (New York City, Los Angeles, Chicago, Houston, Philadelphia, Phoenix, San Antonio, San Diego, Dallas, San Jose) is $1.4 million, that metric was nearly 3 times higher for the list of top ten small cities (shown below), at $4 million.

“Contrary to popular belief, you don’t have to go to a big city to succeed,” says Cindy Yang, a researcher and head of the Small-Business Group at NerdWallet. “While bigger cities have more businesses, they don’t have bigger businesses. It’s the businesses in smaller, surrounding towns that tend to have higher revenue and a higher propensity to have paid employees while enjoying the lower cost of living.”

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For its part, top-ranked Alpharetta offers a strong-for-its-size business density, with 15 businesses per 100 people, in a town with just more than 60,000 in population. (New York City, for contrast, has a population of more than 8 million, and boasts 11 businesses per 100 people). The Georgia town’s average revenue per business is also steep, at $6.9 million.

Ground-level initiatives like the Alpharetta Tech Commission (ATC) have lured hundreds of tech companies and startups, according to Crunchbase. The city’s also home to McKesson’s Technology Solutions division, specializing in information technology for hospitals and physician’s offices.

Peter Tokar, economic development director of Alpharetta and president of the ATC, says the expansion of the GA 400 highway in the 1990s helped transform it into a hotbed for tech. Easy transportation led to the development of a powerful grid infrastructure and thus, a fast fiber-optic network. This paired with a high-end suburban life “drew tech companies to the city like a magnet,” according to Tokar.

Strong local economies and easy access to a larger city’s resources are also important for businesses in small cities to thrive, says Yang. Eight of the top 10 small towns are within an easy commute to major metros like Atlanta, D.C., Seattle and Los Angeles. “This allows small businesses there to operate in a close-knit community that often has a lower-cost of living,” says Yang. Meanwhile, businesses in these tertiary towns can still capitalize on top-notch technology, infrastructure and of course, more affluent customers of neighboring hubs.

Image credit: Alpharetta Technology Commission

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