Best 60 Profitable Business Ideas for Small Towns

Do you live in a small town and want to start a business? Here in this article, we have compiled the most profitable and unique small-town business ideas with little money.

Small towns or Tier 2 and Tier 3 cities in India are coming out to be emerging markets all across the globe. Small towns are potentially the biggest market for consumer goods and as well as eCommerce companies. Find below the selected list of businesses you can start with a low investment for people staying in small towns.

60 Small Town Business Ideas

#1. Grocery Store

A grocery store is one of the most profitable business ideas for people living in small towns. Though the market is competitive, still due to the high population density in the country, there is always a scope for new players to enter this trade.

#2. Agarbatti Making

Any individual can start an Agarbatti-making business on a small scale. Agarbatti is considered a household item in India having great market potential. The burning of Agarbatti or incense in religious and social functions has been practiced traditionally for a long time. People nowadays also use it for a better aromatic experience at home.

#3. Digital Marketing Agency

Starting a digital marketing agency in a small town in India can be hugely profitable in the present day. Some of the main reasons for the feasibility of launching a digital marketing business in a small town are growing demand, low competition, personalized services, low startup costs, and increased digital connectivity.

#4. Mobile Repair Shop

There has been a huge increase in sales of smartphones in recent years in small towns in India. Hence, the demand for mobile repair professionals is also on the rise. If you have the required expertise, offer mobile phone repair services, including screen replacements and software fixes, and make good money.

#5. Tuition Center

If you love teaching, consider starting a tuition center in small towns to provide academic support and coaching to school students.

#6. ATM Space Renting

The demand for ATM space is high. The banks usually rent the space for a certain amount of years and the contract is renewed every two or three years. If you are looking forward to a fixed monthly income, ATM space renting is a good retail business proposition for you.

#7. Bakery and Confectionery

You can open a bakery shop in a small town in India and offer fresh bread, cakes, and snacks to the local population.

#8. Fitness Studio

There is a rising consciousness among people in small towns in the country to remain fit. To tap this market, you can establish a fitness studio offering yoga, Zumba, or aerobics classes to promote health and wellness.

#9. Bedsheet With Pillow Cover

This is a very good consumer product and one of the best business ideas for small towns in India. You can start the business with a small capital investment. Knowledge of the textile industry is important. Small, medium, and large-scale operation is possible.

#10. Bio-diesel Production

Bio-diesel production units can be established in small towns and villages where the main raw material Jatropha oil is easily available. There is a continuous search for renewable sources of fuels due to the rate of depletion of fossils.

The term biofuel is used to define fuels that are obtainable from plants or animals. Being a renewable source, it is gaining attention all over the world today.

#11. Bridal Store

A bridal store focused on specialty wedding attire with allied wedding supplies products is a profitable retail venture in the clothing and fashion industry. Even in a poor economy, brides-to-be and their wedding parties spend a lot of money on bridal attire and wedding accessories because weddings are memorable once-in-a-lifetime events.

#12. Candle Making

Aromatic decorative candles have a big market. It is used as a gift item also. Candle-making business can be initiated on a small scale. Women especially can try this business.

#13. Acrylic Buttons Manufacturing 

The demand for acrylic buttons is increasing due to an increase in the consumption of garments used for domestic use and for exports. The consumption of both these sectors has registered significant growth in the past and it will continue to show good growth in future years.

#14.  Cashew Processing

In cashew processing, the manufacturing activity includes cell cooking, cutting, cashew kernel drying, peeling, grading, and packing. Additionally, you can initiate cashew nut processing as an export-oriented plant too.

#15. Coconut Based Business

Coconut production plays an important role in the coastal economy. If you stay in a place where coconut is grown in plenty, think of starting a coconut-related business.

#16. Costume Jewelry

This is a multi-million dollar industry now. It attracts women of all ages. The major reasons for its popularity are the low price with the highly attractive look. You can start costume jewelry selling from home.

You can sell from your own online store. With the innovation of technology, it is easy now. One of the best business ideas for small towns for housewives and women.

#17. Designer Lace Making

With knowledge about lace knitting, any individual can initiate this business from a home location with small startup capital. Nowadays you will find different lace-making machines.

The commercial lace-making unit is possible by establishing these machines. Designer lace has a very good market demand and is an essential item in designer clothing materials.

#18. Detergent Powder Manufacturing

Detergent and washing powder are surfactants. And washing powder is an important ingredient for cleaning and washing purpose. Generally, there two different types of manufacturing technologies are available. One is spray-dried and another is mixing the raw materials.

#19. Egg Tray

Egg trays are made from scrap paper pulp. The manufacturing process is simple. However, you need at least an area of 400 Sq Ft to run a small-scale egg tray manufacturing unit. This profitable small-town business can be started with low investment.

#20. Exercise Book Making

The exercise book manufacturing process is simple and any individual can initiate this business in a small town or a village with comparatively low startup capital.

The demand for exercise books as office and school stationery items is increasing. According to the demand, several different types of machinery are also available.

#21. Flex Printing

Nowadays, flex is an essential item for outdoor advertising. If you are passionate about starting a small business in the printing industry, you can consider this business. You can start a flex and banner printing business in small towns with little investment.

#22. Ginger Garlic Paste Making

Ginger and Garlic Paste is mainly used as a condiment in various food preparation and also serves as a carminative and gastric stimulant in many medicinal preparations.

As instant mixes and spices are becoming more popular, the demand for ginger garlic paste is also increasing. The Production process is simple. The product has an immense market opportunity for export also. This small-town business can be easily started in rural areas too.

#23. Beauty Salon

If you have a passion for beauty-related activities, start a beauty salon providing grooming services like haircuts, facials, and beauty treatments in any small town in India.

#24. Hair Band Making

Hairband making business is a lucrative and profitable manufacturing idea and is among the most popular small-town business ideas in India. It can be initiated on a medium-scale or small-scale basis.

A Hairband is considered a hair accessory and is used by girls and boys. With the up-gradation and change in fashion trends, different types of fashionable colorful hairbands are now very popular.

#25. Ice Cream Store Business

The ice cream store business with allied products is potentially a profitable retail venture. Selecting the right location with the right product mix is crucial in this business. This is one of the best retail business ideas for small towns.

#26. Iodized Salt Production

Iodized salt is a white crystalline powder salt fortified by Iodine. People can easily avoid iodine deficiency disorder by consuming a sufficient amount of salt fortified with Iodine. Iodized Salt consumption is directly related to population growth.

#27. Jam Jelly Making

Any individual can initiate a jam jelly-making business from home. As your business grows, there are scopes to add similar product lines and shift your project to a convenient premise. jam jelly-making business requires normal machinery and utensils. These are consumable food items and have very good market demand.

#28. Jute Bag Making

Jute is a biodegradable eco-friendly item. Designer jute bad has very good market demand and export potential also. By having simple machinery, you can initiate a jute bag-making unit at your home location also. For an eco-friendly character, the demand for jute yarn, jute fabrics, and other jute items is increasing very fast.

#29. Kids Garment Manufacturing

The infant garment or kid’s garment industry is growing very fast across the globe. You can consider initiating an infant garment manufacturing business of your own. In addition, this business also has very good export potential. In that case, you can also consider starting an export-oriented infant garment manufacturing company.

#30. Leather Belt Making

The leather waist belt is an item of dress used by young to old everyone. It has a functional value besides being a fashion item. The demand for leather belts is increasing in domestic as well as export markets. It is popular among school-going children and youths wearing Western dress. It is also popular among other age groups of men.

#31. Lemonade Making

Lemonade is actually a lemon-flavored very popular soft drink. The principal raw materials required are sugar, citric acid, flavor & essence, food color, and sodium benzoate. However, lemonade-making is a capital and management-intensive business. One of the best summer season business ideas for small towns.

#32. Milling Business

Generally, milling business opportunities involve wide manufacturing operations. According to the product and raw material, you can initiate different types of milling businesses as small and medium-scale industries.

#33. Nail Polish Manufacturing

Nowadays, nail polish is a very common beauty and cosmetic item. The cost involving starting a nail polish unit is also not much. However, the market is competitive and many reputed brands operate in the market. Almost every age group of women uses this item regularly.

#34. Nut Bolt Making

Basically, the nuts and bolts-making business come under light engineering product manufacturing. Nuts and bolts are a type of industrial fasteners used in various products, machines, structures, etc. Nuts and bolts consist of a major link in the family of industrial fasteners and are used by every industry.

#35.  Poultry Farming

Poultry farming is one of the most lucrative small-town business ideas one can start with limited investment. In addition, the land requirement is also not much. If you are short on funds, consider starting a chicken farm on a contractual basis.

#36. Toy Shop

Toys are the most popular item for kids. Children enjoy playing with toys. In addition, they learn several things in their childhood days with the help of different activities and educational toys. Starting a toy shop is worth considering.

#37.  Clothing Shop

Though the market is competitive, still there is a wide scope of making profits from clothing shops in small towns r suburban areas. You will need to tie up with clothing wholesalers who can supply rending and quality garments consistently.

#38. Packaged Drinking Water Production

Increasing awareness of health and the scarcity of getting pure drinking water has made an immense market demand for packaged drinking water. Nowadays people prefer to have packaged drinking water not only outside but also in the house.

In initiating a packaged drinking water business in a small town, it is important to check the PH balance of water where you want to establish the unit.

#39. Papad Making

Any individual can initiate a papad-making business on a small scale. Papad making is one of the most profitable food processing businesses considering the low startup capital investment. Papad is a thin wafer-like product served as fried or roasted.

#40. Paper bag Making

A paper bag or paper sack is a preformed container made of paper. It usually comes with an opening at one end. It can be one layer of paper or multiple layers of paper and other flexible materials.

Paper bags are essential items for packaging and/or carrying items. It’s just the same as packaging design, paper bags are intended to show all the glory of the product inside them. So, your design needs to stand out. This is one of the best business ideas for small towns.

#41. Paper Cup Making

You can start this business with a small investment. The demand for this product is increasing day by day. The Paper cup-making business is one of the most lucrative small-scale manufacturing opportunities for small towns. You can produce the paper cup from recycled paper.

Read: Best Business Loans

#42. Pet Bottles Production

Pet jar or pet bottle production is one of the most lucrative and profitable manufacturing opportunities in the plastic and polymer industry. A pet bottle production unit with a simple process of injection molding and blow molding is a profitable venture for entrepreneurs.

#43. Prawn Farming

If you are staying in villages or rural areas in India, prawn farming is a profitable business idea. However, you need to go through some training on how to farm shrimp before you start this business.

#44. Plastic Toothpick Production

Another small business idea with low investment and high profit. This is a consumer item. The product has good market potential. You can start production at home too. The manufacturing process is simple. The machine cost is also very less. The raw material is easily available.

#45. Start a Preschool

Preschools generally provide early education and care for children aged between three and six years. However, there are some who may be licensed to take children from two years of age.

#46. PVC Pipe Manufacturing 

The demand for PVC pipes and fittings is related to the consumption of PVC pipes. Due to the growing trends in the utilization of PVC pipes for a variety of applications, the demand for fittings is likely to grow substantially.

#47. Rain Coat Manufacturing 

A wide variety of fabrics suitable for rain gear is currently on the market. The production process is simple. It generally includes designing, cutting, and sewing.

#48. Dropshipping Business

E-commerce has virtually wiped out the region-specific advantages of starting a business. Anyone from a small town can start an online business from anywhere irrespective of his/her location. Dropshipping is one business that can be started from a small town at ease.

#49. Start a Restaurant

The food and beverage industry is one of the fastest-growing industries in India. Additionally, the restaurant business is one of the most profitable and lucrative retail opportunities. One of the best food service business ideas for small towns.

#50. Rubber Floor Mat Making

Rubber floor mats are popular as industrial rubber mats, anti-static mats, anti-vibration mats, anti-fatigue mats, rubber mats for use at home, entrance mats, interior mats, car floor mats, and so on. The manufacturing process is not complex.

#51. Solar Business

The solar business has high potential in the future. Hence, both technology routes for the conversion of solar radiation into heat and electricity, namely, solar thermal and solar photovoltaics, can effectively be harnessed providing huge scalability for solar energy worldwide. This is one of the best business ideas for small towns.

#52. Spectacle Frames

The spectacle frame manufacturing business demands simple machinery and equipment. The major required raw material is cellulose acetate. The most fashionable business ideas for small towns.

#53. Spice Powder Making

Spice grinding and packaging is one of the most profitable food processing businesses. Additionally, you can start the business on a small and medium scale. Spice is an essential item in cooking and food processing. Additionally, it comes as a tastemaker.

Apart from individual spice powders like chilly, cumin, and turmeric; special quality mixed spice powder processing is more profitable. Some of the most popular items are meat masala, curry powder, chat masala, etc.

#54. Tissue Paper Making

Household paper products recently have seen a huge demand. tissue paper, facial tissues, and paper towels can be produced by simple machinery. You can initiate the project by concentrating on one or two allied products.

As your business grows, you can make an addition. Household paper product making is one of the most profitable and trending paper business ideas for small towns nowadays.

#55. Tomato Processing

Tomato is a widely available item and processed tomato products are also very popular. The most popular products are tomato sauce, puree, juice, ketchup, etc. In initiating tomato processing, you can also produce tomato pulp for other small-scale industries. Additionally, the business demands simple machinery and equipment. One of the great business ideas for small towns.

#56. Tracksuit Manufacturing

The tracksuit is a popular item among every age group of people. Additionally, men, women, and kids all use this item as sportswear or as casual wear. The dress is hugely comfortable and functional. The item comes in different colors, sizes, patterns, and designs. Additionally, there are different tracksuits for men and women.

#57. Tire Retreading

Tire retreading is a new technology. After applying this method the old tires become serviceable and usable. The part of the tire that comes in contact with the surface of the road is known as the tread. The tread is an integral part of the tire and is responsible for providing traction. Technology-wise this is one of the most trending business ideas for small towns.

#58. Washing Blue Manufacturing

Washing blue or laundry blue is an essential household item. The manufacturing process is simple. Additionally, any individual can initiate this business with moderate startup capital investment.

#59. Woodworking 

Woodworking business is a very good and profitable small-town business. You will find many technically upgraded machinery for woodworking. However, you must select the right product. Additionally, focusing on the right niche is important in this business.

#60. Yoga Studio

The yoga studio business is an upcoming profitable and lucrative small-town business in the health and wellness industry.

The increasing awareness of consumers from remedial care to a preventive care approach has created an enormous potential for initiating a yoga studio for entrepreneurs. Additionally, this is one of the most lucrative business ideas for small towns.

More Business Opportunities for Small Towns

• Stationery Shop
• Catering Services
• Pet Care Services
• Computer Training Institute
• Laundry Services
• Mobile Food Truck
• Farmers Market
• Digital Printing Shop
• Travel Agency
• Photography Studio
• Hardware Store
• Auto Repair Workshop
• Elderly Care Services
• Diagnostic Center
• Pharmacy Shop

What are the advantages of starting a business in small towns?

a) Lower Competition

Small towns generally have fewer businesses compared to big cities. This translates to lower competition, giving new businesses a better chance to establish themselves and gain a larger market share.

b) Tight-Knit Community

Small towns often have a close-knit community, where residents support local businesses. Building a strong relationship with the community can lead to loyal customers and word-of-mouth referrals.

c) Affordable Real Estate and Operating Costs

Real estate and operating costs are usually lower in small towns compared to big cities. This affordability can significantly reduce the initial investment required to start and run a business.

d) Less Bureaucracy

Dealing with government regulations and paperwork may be less complicated in small towns, allowing for a smoother and faster business setup process.

e) Niche Market Opportunities

Small towns often have unique needs and preferences, creating niche market opportunities. Identifying and catering to these specific demands can lead to a successful and specialized business.

f) Personalized Customer Service

With a smaller customer base, businesses can provide more personalized and attentive customer service, which enhances customer satisfaction and loyalty.

g) Market Research Simplification

In smaller towns, understanding the local market and customer preferences is relatively easier due to a smaller population and a closer community network.

h) Supportive Local Authorities

Local governments and authorities in small towns may actively encourage and support new businesses, offering incentives and resources to promote economic growth.

i) Ability to Shape Community Culture

Entrepreneurs in small towns have the opportunity to shape the local community’s culture by introducing innovative products or services.

j) Stronger Sense of Purpose

Starting a business in a small town can have a more profound impact on the community. Entrepreneurs may experience a stronger sense of purpose, knowing they are contributing to the town’s growth and development.

k) Tourism Potential

Some small towns have unique tourist attractions, which can benefit businesses catering to visitors and tourists.

l) Quality of Life

Small towns often offer a higher quality of life with less hustle and bustle compared to big cities, making it an appealing location for business owners seeking a balanced lifestyle.

m) Resilience to Economic Downturns

In times of economic downturns, small towns may be less affected due to their relatively insulated economies, providing more stability for businesses.

What are the major challenges faced by businesses in small towns?

Starting a business in small towns can offer numerous advantages, but it also comes with its share of challenges. Here are some of the major challenges entrepreneurs may face when starting a business in small towns:

1. Limited Market Size

Small towns generally have a smaller population, which can limit the potential customer base for certain businesses. This may restrict growth opportunities, especially for businesses that rely heavily on a larger market.

2. Low Footfall and Customer Traffic

With fewer people living in small towns, businesses may experience lower footfall and customer traffic compared to urban areas. This can make it challenging to attract enough customers to sustain the business.

3. Limited Skilled Workforce

Small towns may have a limited pool of skilled workers with specific expertise, making it challenging to find qualified employees for certain businesses.

4. Limited Infrastructure and Resources

Small towns may have limited infrastructure, inadequate transportation facilities, and limited access to resources, which can hinder business operations and logistics.

5. Lack of Specialized Services

Small towns may lack specialized services and suppliers required for certain businesses, leading to higher costs and longer lead times.

6. Market Penetration Challenges

Established businesses in small towns may already have a strong hold on the local market, making it difficult for new entrants to gain market share.

7. Seasonal and Cyclical Demand

Some small towns experience seasonal or cyclical demand patterns, impacting the stability of businesses that heavily rely on specific seasons or events.

8. Limited Funding Opportunities

Access to funding and capital may be limited in small towns, making it challenging for entrepreneurs to secure loans or investments for their businesses.

9. Limited Networking Opportunities

Small towns may have fewer networking opportunities and industry events, which can limit the exposure of businesses to potential customers and partners.

10. Perception and Branding Challenges

Some customers may perceive businesses in small towns to be of lower quality compared to their urban counterparts, leading to branding and marketing challenges.

11. Regulatory Challenges

Small towns may have unique and sometimes complex regulations, making it important for entrepreneurs to understand and comply with local laws.

12. Reliance on Local Economy

Businesses in small towns may be more vulnerable to economic downturns in the local economy, as there may be fewer diversification options.

13. Mindset and Resistance to Change

Small towns may have a traditional mindset, which can lead to resistance when introducing new products, services, or business models.

Frequently Asked Questions

What businesses do well in small towns?

In the present day, almost all types of businesses make good money in small towns. However, the stand-out categories of business tailor-made for small towns are the following:

• Small manufacturing business
• Product distribution business
• Online business

What is the best business to start in a small village?

Some of the popular and profitable businesses in a small village with low investment are grocery stores, fruit and vegetable shops, farming, and small manufacturing units.

What is the best business to start in a rural area?

In rural areas, agro-related businesses have a greater chance of success. In addition, there are bright scopes of making money in agriculture equipment selling, fertilizer distribution, small rice mill, and selling seeds to farmers.