And the best ‘small’ city in the U.S. for start-ups is … where?

Holland, Mich., was named the best small city in the country by WalletHub’s annual survey. (Jonathan Newton/The Washington Post)

Holland, Mich., is a four-hour drive from Milwaukee and more than 150 miles from Chicago and Detroit. About 33,000 people live in the city, and 113,000 people live in its metro area, according to a recent U.S. census. The region is known for its heavily Dutch-influenced culture, and its annual tulip bulb festival attracts about a million visitors a year.

It’s certainly a beautiful place to live. It also beat out 1,260 other “small” cities as the best in the country to start a business.

Wait … what?

It’s true. That honor was recently bestowed as part of WalletHub’s annual survey of the best small cities in America for business start-ups. Using a complex algorithm that considers things like the average length of a workweek, local growth in small businesses, commute time, revenue per small business, higher education assets in the area and increases in the working-age population, WalletHub — a financial product and credit review service — determined that Holland was the best.

[A start-up says it can back up your brain. However, there’s one small catch.]

The competition was tough. That’s because starting a business in a small city is becoming more and more attractive.

“I have seen tremendous support for small-town businesses from local leaders, schools and residents,” said Michael Glauser, executive director of the Center for Entrepreneurship in the Huntsman School of Business at Utah State University. “One small business owner I know has a store in a small town and one in a large town. He gets far more support and stronger sales in his small-town operation. People want him to succeed and stick around.”

What’s considered to be a “small” town? It’s a city that has from 25,000 to 100,000 residents. Although challenged by limited professional networks, fewer industries, a narrower customer base and a struggle to draw talented workers, a smaller metropolis also comes with much lower overhead costs, closer client relationships and the potential to become a big fish in a little pond.

Holland ranked the highest for the best average score among all categories. But depending on your priorities, other small cities in certain regions of the country may be even more attractive. For example, certain towns in Texas led the pack in small cities where businesses earned the most revenue. Three small towns in Maryland (Salisbury, Cape Girardeau and Raytown) had the cheapest office spaces, and three Utah cities (Sandy, Taylorsville, South Jordan) had the most accessible financing. The D.C. metro region looks like the best place among small towns there to find the most educated workers.

“For many businesses, location no longer matters,” said George Langelett, a professor in the economics department at South Dakota State University. “The reality today is that with YouTube, anyone can obtain a worldwide audience, and with an Internet website and proper marketing, anyone can be part of a worldwide marketplace. With eBay, Amazon and Alibaba, anyone can connect with suppliers from around the world.”

As the cost of housing continues to rise in places like San Francisco and New York, it seems like a no-brainer that an increasing number of start-ups will choose smaller towns that offer a better quality of life for employees to put their roots down and grow.

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