Although big brands may have more resources and capital, authenticity is where small-town businesses like skin care brand Nova Scotia Fisherman shine. When the business started, it opted for local manufacturing instead of saving costs and producing overseas. The decision paid off. Founded in 2014 in a town of 5,000 people, the company flourished and now operates in eight countries, with hundreds of stores in the US and Canada carrying its moisturizers and soaps.
Its success shows starting a small-town business can be both lucrative and beneficial to the local community. Operating a business in a small market brings both unique challenges and opportunities, however, so you’ll need to implement the best business strategies possible. Here’s how to make a small-town business idea work.
4 best practices for starting a small-town business
Here are a few best practices to keep in mind when starting a new business in a small town.
1. Follow legal regulations
Many businesses require permits or occupational licenses. The exact regulations will vary depending on the specific business and your location. For example, California requires hair stylists to be over the age of 17, attend 1,000 hours of cosmetology school, and complete at least the 10th grade of high school, or the equivalent, to receive a license. Check your town or state’s licensing and permitting requirements as a first step to starting a new business.
2. Engage the community
Successful small businesses will have deep ties to the communities where they’re based. This can include knowing your customers by name or offering your products and services at local community events. You can even collaborate with other local small businesses. For example, if you own a specialty grocer, you might collaborate with a local event planning business on a food concept for the next local festival.
3. Research and understand your customers
Another key aspect of successful entrepreneurship in smaller towns is having a thorough understanding of your target market’s wants and needs. For example, local business owners in Prince Edward County, Virginia, got the idea for a successful small-town business by noticing an area lacked a convenience store. They realized there was an unmet need in the community and established a store called The General, selling items such as toothbrushes, candy, beach towels, and specialty foods.
4. Be creative
Successful small-town entrepreneurs solve a problem in a novel way. This requires a lot of out-of-the-box thinking. The owners of the skin care brand Cannuka, for example, developed a novel product line by mixing CBD oil with a burn treatment called Manuka honey. For a pair of entrepreneurs, this meant combining their love of motorcycles and coffee to create Steeltown Garage Co. in Hamilton, Ontario, a motorcycle-themed café.
18 small-town business ideas
- Coffee shop and sports bar
- Food truck
- Ice cream shop
- Grocery store
- Phone repair and computer services
- Clothing boutique
- Secondhand store
- Bed and breakfast owner
- Health food store
- Car wash and gas station
- Pet grooming
- Cleaning services
- Hair salon
- Home improvement business
- Tutoring business
- Flower shop
- Lawn and gardening services
- Nail salon
If you need some inspiration to come up with the right business for your small town, you can look through some of the popular business ideas listed below.
1. Coffee shop and sports bar
Not only do people go to a coffee shop for drinks and snacks in small towns, but they also use them for remote work. At night, a coffee shop can easily be converted into a sports or wine bar, so a business owner can run two businesses under the same roof while only paying one rent.
2. Food truck
If you’ve always dreamed of starting a fast-food restaurant but can’t quite choose the perfect location, a food truck business might be an option. Some estimate that popular food trucks can take in more than $100,000 a year in revenue. Start-up costs for a food truck can be as low as $30,000.
3. Ice cream shop
During warm summer months, many people eat ice cream as their treat of choice. If you are considering opening up an ice cream shop, it can be helpful to choose a family-friendly location and have an alternative business plan in small towns with cold winters. Once you have some options, consider populating a business plan template to flesh out your idea.
4. Grocery store
Every small town needs a local grocery store where shoppers can buy food and household supplies like soap and paper towels. Networking with local farmers to help bring their products to market can be a great way to forge community connections and provide customers with fresh, nutritious ingredients.
5. Phone repair and computer services
The demand for technology repair services is growing as people rely more on their phones and computers for work and entertainment. Many community colleges offer phone and computer repair training programs.
6. Clothing boutique
If you enjoy fashion or sewing, you might consider opening a clothing boutique. With online tools like Shopify, you can run your store without the need for a lot of capital, because you won’t have to pay rent for a brick-and-mortar store.
7. Secondhand store
Online secondhand stores have low start-up costs because you can start by selling your own used items that you no longer want. You can sell entirely online and only pay for website maintenance, packaging, and shipping costs. If this is successful, you can scout for well-priced goods at yard or estate sales to expand your business.
8. Bed and breakfast owner
Many small towns receive visitors who need a place to stay. You can open a bed and breakfast to cater to these out-of-town guests. If you are interested in hospitality but wary of making a large, long-term real estate investment, you can also try renting out a room in your home through a listing service such as Airbnb.
9. Health food store
Many people follow special diets, and the typical grocery store doesn’t always meet their needs. Opening a health food store to cater to these individuals, especially if you’re able to source hard-to-find items, can help you win a loyal customer base.
10. Car wash and gas station
Car ownership is higher in small towns than big cities, making a car wash and gas station potentially a very lucrative business. Car washes and gas stations often operate side by side and benefit from each other’s customers.
11. Pet grooming
The average pet groomer charges $30 to $90 per dog, and many groomers operate out of the comfort of their own homes. This makes it a fairly inexpensive business idea.
12. Cleaning services
Busy working adults often lack time to do household chores, so many hire cleaners. Because cleaners spend a lot of time in their clients’ homes, building trust and rapport with your customers can help increase your chances of success.
13. Hair salon
If you are talented with a pair of scissors and enjoy styling people’s hair, you might consider opening a hair salon. You can start by styling your friends’ hair at home and sharing the results on social media. If all goes well, you could consider renting or purchasing salon space.
14. Home improvement business
Home improvement businesses help repair, remodel, and modernize people’s houses. Homeownership is usually higher in small towns than in big cities, which can make home improvement the perfect business idea for those areas.
15. Tutoring business
At some point, many students need tutors for help with their studies. If you have any expertise in test-taking or specific subjects like math or chemistry, you may want to consider offering tutoring services.
16. Flower shop
On special occasions, many people turn to their local flower shop for floral arrangements. The most expensive aspect of owning a flower shop—as much as $10,000 a year—is maintaining the right temperature and environment for your flowers. For those who want to farm their own flowers, the main costs are gardening supplies, seeds, fertilizer, and land to plant the flowers on.
17. Lawn and gardening services
In small towns with lots of single-family homes, a lawn and gardening service can also be a great business idea. Lawnmowers and gardening equipment can be purchased for less than $500, making it a relatively low-cost, small business idea to start.
18. Nail salon
Nail salons are very popular in the US, and the average nail salon has a revenue of $287,000 and an average profit margin of 17%. However, the start-up cost of a nail salon is relatively high because of the space needed.
Small-town business ideas FAQ
How can I attract customers and build a strong community presence in a small town?
You can advertise in your town’s local paper and on social media. Make sure to network with small-town residents as well. You can do this by paying for advertising, attending local events, and reaching out to any friends in the area who can help promote your business.
How can I compete with big brands in a small-town market?
Small businesses tend to have more flexibility in how they operate compared to big businesses. Find out what your customers wish could be improved in their experiences with big brands and then make the effort to implement those ideas in your business.
What is the key to success when starting a small-town business?
To start a successful business, you need to provide excellent customer service and understand the community you serve. You also need to carefully watch your finances and make sure your decisions support long-term goals for your business.
How can I find funding for my small-town business?
The US Small Business Administration offers loans specifically for small businesses. Additionally, many banks and private lenders also offer loans to small businesses. Certain government agencies and private organizations offer grants to businesses as well.