8 Surprising Factors That Can Make or Break Your Small Business Growth

Starting a small business is exciting, but let’s be real: It’s also a challenge.  Sometimes, even if you have an idea and a solid plan for an excellent product, things can still go awry due to circumstances that arise unexpectedly along the way. It’s not about putting in the effort but about being aware of potential obstacles that could impede your progress and finding ways to overcome them proactively. The key to achieving success lies in anticipating these hurdles and making thought-out choices before they obstruct your path forward.

So, what are these sneaky success-makers (or deal-breakers)? Let’s dive in.

1. The Power of Local Consumer Trends

You could have the perfect business model, but if your target audience isn’t buying what you’re selling, it won’t matter. Consumer preferences shift depending on the location. What’s popular in Austin might not fly in Chicago. A trendy vegan café might thrive in Los Angeles but struggle in a rural town where demand for plant-based options is low.

Before starting your business venture in a location, it’s important to investigate the market demand. Are there customers in what you offer? Will they be willing to make a purchase? Take the time to gather feedback through surveys, review market studies, and assess your competitors’ strategies to understand approaches and areas for improvement. Stay current with market trends. Be prepared to adjust your business strategy as necessary. Some businesses flourish because they tap into what people actually want, not just what they think people should want.

2. The City’s Economic Health and Future Growth

Research a city’s economic health, future development plans, and industry trends before making a commitment. Is the area attracting new businesses? Are people moving in or leaving? These factors can give you valuable insights into your business’s long-term potential. Looking beyond current conditions, will the city continue to grow, or is it at risk of economic downturn?

Some of the top business cities in the US offer thriving economies, strong infrastructure, and a supportive entrepreneurial environment, making them ideal locations for business growth. Strategic planning based on economic trends can help ensure long-term stability.

3. Workforce Availability and Talent Pool

If your business depends on employees, hiring the right people is crucial. But here’s the kicker: Some areas just don’t have the talent pool you need. A tech startup in a city with little to no skilled developers? That’s an uphill battle. Similarly, opening a high-end restaurant in a location where experienced chefs and hospitality workers are scarce can spell disaster.

On the flip side, being in a place with a strong workforce can be a game-changer. Look at local education levels, industry presence, and job market trends. Even if you’re running a remote-friendly business, having access to great local talent can be a huge advantage. If the talent you need isn’t available locally, you may have to offer higher salaries to attract workers from other regions or invest in training programs to upskill employees.

4. The True Cost of Doing Business

Think rent is your only major expense? Think again. From utilities to local business fees, insurance costs, and even parking expenses, there’s a lot more that goes into the price of running a business. These hidden costs can add up quickly and eat into your profits if you’re not prepared.

Some cities in the US are far more cost-effective than others. While big metro areas might offer great opportunities, they can also eat up your budget fast. Balancing affordability with opportunity is key. Don’t just look at income potential; factor in everything from office space prices to the cost of goods and services in your area. Also, consider long-term sustainability; a lower cost of living can make hiring and employee retention easier, improving overall business stability.

5. Digital Infrastructure and Connectivity

We live in a digital-first world. If you don’t have reliable high-speed internet, access to digital tools, or a strong online presence, you’re already at a disadvantage. Some locations still struggle with connectivity issues—yes, even in 2025!

This matters whether you’re running an e-commerce store, a remote business, or a service-based company. Poor infrastructure can slow down operations, affect customer experience, and make communication a nightmare. Before setting up shop, check out how tech-friendly your city really is. Is fiber-optic internet available? Are there coworking spaces with reliable connectivity? Businesses that rely on digital tools need to prioritize this factor just as much as location and cost.

6. Local Competition vs. Market Demand

Competition is healthy, it keeps businesses sharp. But too much competition in a saturated market? That’s a different story. On the other hand, being in a city with low competition but no demand isn’t a win either.

The trick is finding a balance. Is there room for your business to stand out? Are there enough potential customers to support another player in your niche? Conduct a competitive analysis to determine if your business can offer something unique. Sometimes, entering a smaller but underserved market can be a smarter move than trying to fight for space in an overcrowded industry hub. Differentiation, whether through pricing, branding, customer experience, or product innovation, will be crucial to survival and success.

7. Access to Funding and Business Support

Starting a business takes money. Expanding it takes even more. But not all cities make it easy to secure funding. Some places have strong networks of investors, business grants, and small business loan programs, while others… well, you might be on your own.

Look into what kind of financial support is available. Are there small business incubators? Local investment groups? Crowdfunding-friendly communities? Even if you’re bootstrapping, knowing where and how to get financial backing can make or break your growth potential. Some cities have innovation hubs where startups can find mentorship, networking opportunities, and even government-backed funding programs. Leverage these resources to give your business a financial edge.

8. Business Regulations and Local Policies

Nobody likes red tape, but it’s a fact of life when running a business. Every city and state has different rules, permits, taxes, and zoning laws that can affect how smoothly (or painfully) your business runs. Some places make it easy to start and grow, while others… not so much.

 In some cases, different cities provide incentives like tax cuts and financial aid to support businesses, while other places impose taxes and more stringent rules that could greatly affect your profits.  Some areas have complex licensing requirements that can delay your launch by months. Do your homework before choosing your business location because getting stuck in a bureaucratic nightmare is the last thing you need. Consider consulting a local business lawyer or joining industry-specific groups to get insider insights.

Final Thoughts

There’s no one-size-fits-all formula for small business success. But by paying attention to these eight factors, you’ll be in a much better position to make smart decisions that support your growth.

Thinking of starting or relocating your business? Do your research, weigh your options, and choose a place that sets you up for success. The right location, strategy, and support system can make all the difference.

What surprising factor has impacted your business the most?