10 Small Town Business Ideas: What Does Your Small Town Need?
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
Ambitious entrepreneurs — whether they live in one or want to move to one — see opportunities in small towns across America.
There are distinct advantages to owning a business in small town America. Living and working in a small town is a different way of life. Many businesses that thrive in metropolitan areas wouldn’t survive a month in a small town. If you’re thinking about opening a business in a small town, check out our small town business ideas to help you get started.
Here’s a list of 10 business ideas that every small town needs.
1. Coffee shop
Every town should have a coffee shop. If you’re a coffee lover, you’re not alone. According to the National Coffee Association, 64% of U.S. consumers over the age of 18 drink coffee daily.
The beauty of a locally-owned coffee shop is that each one is different. You can cater to the coffee aficionado and the customer who simply wants to enjoy a hot cup of your daily brew.
Some customers are looking for a daily fix and others are looking to enjoy the experience of leisurely sipping a specialty coffee on their birthday.
Both customers alike should know that when they walk into your shop, they’re guaranteed to be greeted with a smile and a great cup of coffee.
2. Grocery store
It’s not convenient or always possible to drive a long distance to get groceries. Opening a grocery store in a small town that doesn’t have one can have an immediate impact on the local community. Having access to food is a necessity.
According to the Center for Rural Affairs, “If you live in a rural community, you understand that our grocery store is arguably one of the most important businesses in town.”
If you’re looking to open a small business but not tied to a specific location, research towns or areas that don’t have grocery stores. Opportunities await for the right entrepreneur.
Pharmacists play a vital role in our healthcare system. They not only fill prescriptions, they provide patient care activities, such as counseling and preventative care screenings.
Pharmacies count on retail sales for revenue and traffic flow. In addition to prescriptions, consider the needs of the community to determine what else to have in stock, such as, over the counter medication, baby formula, toiletries, vitamins, etc.
4. Hair salon
Every small town should have a hair salon. Almost everyone needs a haircut at one point or another. Depending on the size of the town, you might be able to employ a few additional employees.
Listen to your customers and consider adding additional services, like waxing or nail services, if there’s a need.
Every town needs a local handyman. Some people are not handy at all. In fact, they may not even own a toolbox. Others might hire a handyman for a job they can’t do alone or is just too time consuming.
A trusted and affordable handyman is sure to stay busy, even in a small town.
Starting a small daycare in your home can be a source of income while you take care of your own children. The number of children that you can watch at one time varies from state to state. In Illinois, providers who care for more than three unrelated children must have a license.
If you’re thinking bigger, you may want to consider exploring what options may be available in your state, such as opening a daycare at a church or local recreation center.
Not everyone is fortunate to have a washer and dryer in their apartment or house. However, a laundromat isn’t just for people who can’t wash their clothes at home.
People also use laundromats to wash particularly large items, like a king comforter, or extra dirty items that they don’t want to bring in their home.
A laundromat plays an important role in a community. Individuals should have the ability to clean their clothes even if they don’t have the options to do so at home.
8. Auto repair shop/gas station
There’s no denying that every small town needs a gas station, and a mechanic. As a business owner, you want to have multiple streams of income.
If you’re thinking about opening an auto body shop, expand your concept to include one or two gas pumps. Even if there is a gas station in your town, being able to offer an additional service without much effort can increase your return on investment.
While mechanical expertise is vital to the success of an auto repair shop, building trust with a focus on customer service keeps your small town customers coming back.
Every small town needs a bar. It’s a gathering place to talk about the day’s news or catch up with an old friend.
The longer a customer stays, the more money they spend. Set aside some money during the startup phase to invest in some activities to attract, engage and keep your customers coming back.
Some ideas include:
- Pool table
- Ping pong table
- Board games
- Karaoke machine
- Foosball table
- Dart board
And, on typically slow nights during the week, set up promotions or special events, such as trivia night or open mic night.
Every town needs restaurants but not every town needs every type of restaurant. There’s probably a pizza shop in town. Is there a restaurant that serves really good inexpensive breakfast? What about an all-American restaurant that serves a variety of good burgers and fries?
Coe and Jean Sherrard, 69, always dreamed of owning a small cafe in a quaint mountain town. After a successful corporate career, they decided to ease into retirement by moving to Woodstock, VA, where they opened Woodstock Café.
Owning a business in a town with a little over 5,000 people is not easy. To set themselves apart from other restaurants, they began hosting occasional special events. The special events became so popular in the community that they now have live music every Sunday and “Thursday Nites at the Café,” offering a special seasonal menu paired with great wines.
Coe and Jean found a way to set themselves apart by offering great food and a friendly environment. With hundreds of five-star reviews, old and new customers flock to Woodstock Café.
Every business starts as a small idea. Some ideas go on to become fortune 500 companies and others never make it off the ground.
No matter how great of an idea you have, it’s necessary to understand if there is a need or demand that your idea can fulfill. That’s especially important in a small town.
Here are four ways to assess your town’s needs to grow your idea into a thriving business.
1. Do your research.
If you’ve lived in an area for quite some time, you probably have an idea of your potential consumer base.
To launch a successful business, it’s critical to define your target market from the outset.
The term target market is used to describe a specific group of people or organizations that are most likely to buy what your business is selling. To define your target market, you want to start by looking at demographic data, such as population, age and income. You can then assess whether your target market alights with the demographic profile of your small town or customer base.
Think of it this way: It’s highly unlikely that a Ferrari dealership could survive in an area where the median income is $35,000.
Understanding demographic data allows you to better understand the barriers and opportunities you may be faced with that are out of your control.
Here’s a list of resources to help you define the right customer demographics for your business:
- U.S. Small Business Administration – local assistance
- Bureau of Labor Statistics (BLS)
- Local Chamber of Commerce
- Town or city government
2. Find a need.
If you’re not sure what type of business you want to open, take a look around you. You want to start a business that solves a need for the people of that community.
For example, a small town needs a grocery store; however, they don’t need three grocery stores. If you’re dead set on opening a grocery store, find a niche. Think about opening a gourmet deli that also sells specialty groceries that customers cannot buy anywhere else.
Being able to identify the right type of business that your small town needs will set your business apart.
3. Understand your competitors.
Successful entrepreneurs spend a significant amount of time analyzing their competition.
By doing this, you can identify ways to differentiate your business from the competition.
At a minimum, it’s wise to know your competitors well enough to be able to answer these questions about the market and individual competitors:
- Who are your competitors?
- What do they do well?
- Where are their weaknesses?
- How is your business different from the competition?
- How much do they charge for their products and services?
Opening a business in a small town has its advantages. One being, people like to talk. They like to talk about outstanding experiences (I had the best pizza in my entire life!) and really bad experiences (there was a hair in my salad!). Good conversations don’t happen over mediocrity.
Obviously, as a business owner, you want to be on the receiving end of glorifying praise.
In addition to analyzing your competition, pay attention to the community around you.
Listen to how people describe what they like and don’t like. What are they saying about businesses that they love? What are common complaints you hear? What sort of reviews are they leaving on the internet?
Community chatter can give you real-life insight into your small town’s likes and dislikes that no amount of data can replicate.
Finally, don’t underestimate how many competitors are out there. Just because you’re the only florist in town doesn’t mean there’s no competition. Look at online businesses. For example, Amazon sells flowers and even delivers them to the front door.
Also, take a look at surrounding businesses that offer your product or service even though it’s not their main business. Most grocery stores sell fresh-cut flowers. They’re also your competition. As your business grows, continue to assess the competition around you.
No matter how small your new venture may be, putting together a business plan is important to the success of your business.
According to the Small Business Administration, “Creating a business plan is one of the most important steps you will take because the plan serves as your road map for the early years of your business.”
Entrepreneurship isn’t for everyone. Opening a successful business requires hard work, effective planning and a competitive spirit, coupled with sound money management and lots of time.
You want to ask yourself these basic questions before you invest a lot of time and money into a business idea.
Do you have what it takes?
Starting and running your own business demands a huge commitment, especially during the startup phase. You’ll have to sacrifice time, energy and money to get your business off the ground. If something goes wrong, you’ll be the one who has to come up with a solution, even if it’s in the middle of the night.
Do you need training or certification courses to open your business?
You’ll need a combination of local and state licenses and permits to open and operate your business. Some of which require formalized training or accreditation.
The specific requirements depend on the location of your business and what type of business you’re opening.
The Rhode Island Department of Health, for example, requires restaurants to have at least one certified full-time, on-site food safety manager who is at least 18 years old. If the restaurant employs more than 10 full-time employees, there must be at least two certified managers.
To qualify as a manager in food safety, an individual must complete an eight-hour food certification course and pass the Food Safety Certification Examination.
During the initial planning stage, research your own state, county, city and industry requirements and regulations. This way, you can plan out the amount of time it will take to obtain all the necessary licenses and certifications to run your business.
Can you ask for help?
As a business owner, you’ll have to become a “jack of all trades.” It’s imperative to acknowledge your own weaknesses. From there you’ll be able to build a team of professionals that can handle aspects of the business that you don’t know much about.
For example, if you open up a beauty salon, there’s a chance that you’re not an accounting expert. Hire a bookkeeper or accountant. At the very least, it’s wise to get some really good accounting software.
In the short term, it might seem like an expensive investment, especially if you’re just starting out. In the long run, if you try to do it yourself, minor mistakes can have serious implications.
Do you understand the risks involved?
It’s prudent to invest in yourself and your business from the outset.
Seek legal counsel to guide you through the startup process. Plan for success, but also have a plan if the wheels come off, so you don’t end up losing your house and your retirement accounts as well as the money you invested in the business.
The U.S. Small Business Administration requires that business owners provide an unlimited personal guarantee to qualify for a small business loan. That means that you, as the guarantor, are personally liable if the business cannot pay back the loan, putting yourself and your financial future on the line.
Going “all in” like that is a decision you should make with professional advice. An attorney can help.
Also, as a business owner, you’re responsible for managing risks in order to keep your business, yourself, your employees and your customers safe. This means considering all the risks of, say, running a day care center, brewing beer or raising honeybees. An attorney can help you do that too.
Stephen Burke, 64, owner and founder of the Law Offices of Stephen H. Burke, Esq., has been representing small businesses for over 30 years. He advises new business owners to budget for legal counsel from day one.
“Early mistakes can be inexpensively avoided by retaining competent counsel at the outset,” “Fixing mistakes later can be much more expensive,” Stephen advises.
“The best advice an attorney can give a client is to make an agreement with himself or herself to grow a little more slowly, and delay that ROI a little bit, by spending some initial capital on counsel up front.”