Why do Brands now prefer smaller cities & towns over bigger cities?

Small Towns vs Big Cities

We tend to believe that big business is always located in prime locations. In reality, smaller cities and towns hold more potential for business’ growth. Even big brands are considering moving to smaller cities to expand their businesses in various factors, such as availability of resources, affordability, costs involved in setting up the business, easy market penetration, etc.

This article will discuss and understand why smaller cities and towns can fuel growth for businesses.

Why do Brands Prefer Smaller Cities & Towns?

The main reason for brands looking to smaller cities and towns in the ecosystem that these areas offer. Some of the benefits of creating a business base in smaller cities are as follows:

Real estate prices are economical.
Low investment.
Operating costs are comparatively low.
Many incentives are offered by the local or the state government in concessions, tax rebates, etc.
Competition is less compared to big cities.
Establishing a relationship with the community is easy.
Plenty of opportunities available for future growth and expansion.
Employment of local personnel helps retain them for a more extended period.

Thus, starting a business in or expanding it to a small town or city always offers tremendous opportunity.

How to Start Your Own Business?

In the era of start-ups and new businesses, it is vital to understand what factors help them turn profitable overnight. It requires proper planning, analysis, patience, and hard work.

Here are a few tips that will help you start a new business in a smaller town or city and understand the market complexities.

Implement proper planning and research on every aspect of the business you want to start.
Budget your finances.
Choose a business structure and a name for your organisation.
Decide the mode of operation (physical or online).
Register your business.
Get all the necessary permissions, permits, and licenses.
Keep detailed records of every transaction, movement of materials, goods, etc.
Analyse your competitors.
Inculcate creativity in your business by offering unique goods and services.
Save costs and be economical but do not compromise on quality.
Manage your cash flows.
Set milestones for your business.

What Potential do smaller cities and towns hold?

After understanding the basics of starting a business, we shall now outline the four critical aspects of the potential benefits of starting a new business in smaller cities. They are as follows:

1. Financial outlook

When we think of establishing or expanding any business, the first thought that comes to mind is capital. The main reason why smaller cities are economical is the ease of availability of cost-effective resources like land, labor, capital, and raw material. You can start your business with a small amount of capital in a smaller city or apply for loans.

Here’s how technology plays an important role in cutting back some costs:

The administrative costs can be reduced by using different software types instead of hiring individuals for the same.
Accounting and book-keeping have also been made easier due to the presence of several applications. Payment of bills can be automated online.
The transfer of money within seconds has eliminated the time taken to receive payments and clear dues; this enhances the working capital cycle and cash in hand.

2. Inexpensive marketing

With the evolution of marketing, gone are those days when people only rely on posters, billboards, banners, radio ads, etc., for marketing and sales. After starting your business or even before its establishment, you can use digital marketing tools for advertising and merchandising along with some traditional ones.

Today, the first choice of all brands for marketing is digital marketing. For businesses in small cities and towns, one can use traditional techniques like distribution of pamphlets, roadshows for awareness, word of mouth, personal selling, etc.
In order to grow the business, one needs to market it and target the potential audience with proper strategy.
Online websites, social media management, content writing, copywriting, blogging, etc., for marketing are used more often nowadays. For marketing in small cities, one can rely on newspaper or print media advertising and word of mouth referrals.

3. Infrastructural benefits

Smaller cities and towns are better in terms of infrastructure, which helps in improving the local economy. The availability of various facilities makes them attractive for businesses looking to establish a unit or expand. Some of the benefits relating to infrastructure are:

Supply of power at an affordable price.
Better waste management system.
Connectivity with nearby areas.
Irrigation facilities and water supply are available easily.
Low maintenance and repairs cost.
Pollution levels are moderate to low.
Affordable products because of the low cost of production.
Land, buildings, offices, etc. are low-priced.

4. Economic well-being

We all know that businesses contribute to the economic growth of the country, and they are equally important for the development of the economy. A business in a smaller city can adapt quickly to changing market conditions with the right management. Starting a business in a smaller town or city can benefit the economy in the following ways:

It generates employment opportunities for local people.
Local resources are utilised, which generates income for a vast population.
The demand for local goods and services increases, thus reducing imports and the cost.
It results in multi-sector growth as sectors are linked to each other.
The community benefits in terms of employment, affordably priced goods and services, quality goods and services, etc.
The local bodies and authorities receive taxes that contribute to the development of the city and state.

Achievable Goals For a Successful Business

While starting a new business or running an existing business, many factors need to be considered. Your business plan should be well defined, clear, and needs to be executed well.

The benefits of a small city or town concerning a business’s goals (which can be achieved easily) are as follows:

Innovation and customisation can be done as per needs and preferences.
Selecting the target market can be narrowed down quickly in a smaller city.
Establishing a brand image in a smaller town can be done with minimal effort.
Collaboration with other small businesses or people connected with your business is possible.
Outsourcing helps with saving costs.
The cost of acquiring funds is economical compared to larger cities.
Attracting a new customer base is convenient.
Investment in research is sustainable because of limited geography.

Conclusion

Thus, we can see that the smaller cities and towns are emerging as new capitals for brands because of the potential they offer in terms of cost-efficiency, adequate availability of production factors, and labor. Support from the community and ample networking opportunities create anticipation for the future growth of the business.

Also read:
Digital growth of brands over the years
What is the best form of advertising today in the modern world?
11 Easy Ways for Small Businesses to promote their Business on Social Media
How is the Government helping Small Businesses & Startups fight the financial crisis?

FAQs

Q. How to fund your business in a small city?

Ans: After deciding how much funds you will need, analyse the various available options, such as:

Loans from co-operative banks
Government grants
Direct lending platforms
Venture capital
Personal savings

Q. What are the various types of loans available for businesses in small cities?

Ans: The types of loans available for business are term loans, loans for working capital, financing for invoices, overdraft, loans against collateral, lines of credit, etc.

Q. What are the documents needed for registering a business in India?

Ans: You need to get a PAN and Taxpayers Identification Number (TIN) from the nearest service center after filling the necessary form, attaching the required documents, and paying the fees.

Q. What are the legal structures for businesses to start in a smaller city in India?

Ans: Small businesses in India can be run as either proprietorship concerns, partnership firms, limited liability partnerships (LLP), or small companies.

Q. Are there any free tools available for promotion?

Ans: Yes, you will find a lot of free tools for promotion online, and you can always use social media accounts for publicising within your network.

Q. How can businesses in a small town save time with payments and transfers?

Ans: This can be done by transferring money through mobile applications like PayTM, Google Pay, PhonePe, BHIM UPI, etc., and linking them to your bank account. A mobile handset and network connectivity are needed for these options.

Q. Are mobile applications available for administrative functions like ledgers, salary payments, attendance records, etc.?

Ans: Yes, mobile applications are available for maintaining records. Bills can also be paid if automated.

Q. What are the promotion tools available for businesses in small cities?

Ans:. Digital technology, email marketing, paid social media, influencers, social activities, sponsorships, etc., are the various promotional tools available. Select the best option based on your business and target market.