Top 5 reasons to setup a business in a small city

Have a unique startup idea? That sounds great! And yes! It all begins with an idea. But it is also likely to end there. Unless you have taken into consideration three important factors. Firstly, the business environment, secondly, accesses to resources such as - a pool of talent, finances, investment, and employees. And thirdly, the cost of doing business. In the past, large cities have attracted cartloads of entrepreneurship because of the perceived business environment and access to resources, as deserved. But, the advances in internet access, Communications Technology, Digitalization of Markets and advances in transportation have begun to change the scenario. Small cities are now better integrated and revolutionizing market trends. There is a noticeable shift towards setting up business entrepreneurship in small cities and towns due to their unique advantage.

Here are the top 5 reasons why you should set up a new startup in a small city or town.

1. Lower cost of business operations for new startups

In the early stages of a new startup, profits are rare or limited if any. You need to pour in loads of money to keep the company running. Depending on the type of business, it takes a year or two to break even, and furthermore, to make decent profits. Most startups take off well but fail in the second stage, where they are unable to sustain the set business. This is often due to the drying up of funds.

It is thus unwise to scatter finances on non-income-generating assets like office space, godown or workshops, etc. In a large city, the cost of purchasing or renting office space is exorbitantly high. Paying large sums of money for rent month after month leaves a large dent on the saved up finances. On the other hand, real estate in small cities is much cheaper; it is less than half to one-third of the costs in large cities. A startup in a small town thus drastically cuts the cost of operations and gives you a chance at survival. Thus, you can take the necessary risks required for the growth and expansion of the startup. You do not want to dry your financial pool and hence, must consider a smaller city or town for the health of your business.

2. Lower labor cost and cost of living

Wage payment is a monthly recurring expense that can prove to be a burden for a new startup. Minimizing wage payment and investing the saved amount back into the startup is a smarter thing to do. In order to compensate for the high wage cost, the amount of work per employee is drastically increased. Dehumanizing long working hours and unsafe, unhealthy working conditions are common. Setting a startup in a small city, on the other hand, saves you from resorting to such shameful business practices. This is because the cost of living in small cities is much lower, which means the average employee wage rate is also comparatively low. The employee wage cost thus automatically comes down without using questionable business ethics. Lower cost of living also translates into lower cost of repair, maintenance, courier, and other services required to keep the business well oiled.

Avoids insane compromises on the life and family front.

Unique startup ideas require long periods of commitment and focus which may force you to make insane compromises on the family and relationships front. This is especially inescapable if you live in a large expensive city. A small city, on the other hand, offers you a great lifestyle at much lesser expenses. Sports amenities like stadiums clubs, pools, etc. are available in modest budgets. Maintaining a family, entertainment, social life, etc are all less expensive in a small city. A well balanced holistic life in a small city keeps you energized and gets you going after your dreams day after day.

3. Higher talent retention rates in a small city

No doubt, big cities have a large and diverse pool of talent and skill, they also have abundant opportunities to hop companies, even for a small pay difference. This is less likely in smaller towns. People in small cities and towns are more likely to stick to one company as there are not many other companies with the same profile requirement. They are also eager to learn, adapt, and pursue new job opportunities. Talent retention is critical for the smooth running and success of a new startup. Hiring and training new staff every few months is simply a waste of time and energy. Especially in the initial stages of the new business.

Also, as of today, distances have shrunk. Seemingly far off places are brought much closer by air travel and internet connectivity. It is advantageous to set up your new business idea in a city that is close to as well as well-connected to another large city. A city that has colleges and universities that churn out educated workforce must be especially sort after for a new startup. They will serve as your workforce, your consumer base, as well as publicists for your product or services depending on the type of startup.

4. Easy network opportunities and lesser competition

A new business or new startup is a much bigger deal in a small city. Setting up something different or new immediately makes you visible to the small local community. It instantly pulls you into the circles of local leaders and authorities. This proves extremely useful for networking as well as gaining the required local support for growing a new business venture.

A large city has excess resources and capital, and a small new startup is easily lost in large cities crowds. Individuals with more resources, power, and capital have an advantage and can easily hijack your business idea. They will outperform even before you have a fair fighting chance. On the other hand, you would be a pioneer in a small city. This automatically slashes competition and gives you a head start even if someone else were to emulate your unique startup idea.

5. Saves commute time and increase productivity

The energy and drive in a metropolitan city are electrifying, but at the same time, its traffic and congestion are equally dampening and annoying. There is no escape from this reality each day of your life. The long waiting hours are draining and kill employee productivity. On the other hand, the time consumed for commute in smaller cities is next to negligible. Compared to 2-3 hours in larger cities, a brisk 15 - 30 minutes is all it takes in a small city. Thus employees find more family time, recreation time and learning time to master their skill. This gives them a sense of fulfillment, enthusiasm, and loyalty to work for you. You will also find time for allied activities like networking, marketing, meetings, planning, idea generation, etc. These activities are essential to push your startup to high levels of success.

A small city is often considered nonpromising for a new business venture. But, a little research, planning, and vision will convince you of the immense cost-benefit and sustainable business advantages of a small city. A small city might be the only way to gain the much-needed breathing space required for the survival of a new startup. An early bird always catches its prey, recognize these early signs of change before the small cities get flooded. Small cities are the new generation's startup destination! Don’t bypass them.

Penned By: Nikita Mundada