It seems that starting a business is easier in a big city: there are more customers and higher incomes among the population. But small towns also offer good opportunities for entrepreneurs. If you spot a trend in time and bring it to your town first, you can occupy a niche for years to come.
What are the peculiarities of doing business in a small town?
First, let’s define what is considered a ‘small town’. In general, if a town is not a regional centre, then it most likely falls into the category of small towns. Usually, these are towns with a population of less than 50,000.
The main feature of a small town is that it is slower to adopt new trends: the principle of diffusion of innovation applies. This is when new products first appear in capital cities, then in large regional centres, and only then reach district towns. Sometimes this takes years.
This happens partly because residents of small towns and settlements are more conservative, preferring the familiar way of life and trying new things cautiously.
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That is why starting a business in a small town often looks like this: an entrepreneur lives in Moscow or a regional centre, sees a successful format there and brings it back to their hometown. This is how the first barbershops, coffee shops and food delivery services appeared in provincial towns. Being the first to bring in a trend is the main driver of business success in small towns.
There are two more features of this type of business:
Risks. There are always risks in business, but in a small town, they are more difficult to overcome. The reason is simple: the market is smaller, the number of customers is limited, and a competitor can appear at any moment. For example, if you invest in a coffee shop and a second one opens a block away, the traffic is immediately divided between the two, and it becomes more difficult to recoup your investment.
It is also important to remember that the purchasing power of the population in a small town is lower than in large cities, so it will not be possible to raise prices ‘like in Moscow’.
Locality of services. In small towns, ‘here and now’ services work best: retail, consumer services, catering, beauty salons, hairdressers. They cannot be brought in from a neighbouring city, so there is always demand for them.
Production can expand beyond the city limits — for example, a small concrete plant can serve neighbouring areas. However, services are almost always strictly tied to a specific location. Therefore, in order for them to be profitable, it is important that there are people living nearby who are willing to purchase these services.
What are some promising business ideas for small towns?
We have already figured out that in small towns, those who are the first to bring in a growing trend almost always win. Therefore, when choosing an idea, focus not on a ready-made list of businesses, but on areas that are gaining popularity in capital cities and gradually reaching the regions. The main thing is to launch the project before the trend becomes outdated.
I will tell you about several trends that have already proven their viability in large cities and have the potential for development in small ones.
The trend towards digitalisation and automation. Large cities are switching to formats without cashiers and waiters. Users place their orders through an app and receive notifications with order statuses — everything works technologically and quickly.
An example of this trend is self-service coffee shops, which are being set up in shopping centres, gyms and other public places. At these automated outlets, you can get coffee without a barista and pay via a terminal or mobile app.
