The Top 5 Not So Known Cities to Start a Business on a Budget

Discover the top affordable cities for entrepreneurs looking to start a business without breaking the bank.

Starting a business on a budget can be a daunting task, especially if you are unfamiliar with the business landscape of your chosen location. While well-known cities like San Francisco and New York may seem like obvious choices, they are also some of the most expensive places to start a business.

Fortunately, there are several not-so-well-known cities that provide a conducive environment for starting a business on a budget. Here are the top five:

1. Da Nang, Vietnam

Living in Vietnam is like a vibrant painting coming to life, with its rich cultural tapestry, stunning natural landscapes, and warm hospitality of its people.

Da Nang, a central Vietnamese city with over one million residents, is an attractive location for entrepreneurs in 2023. It is recognized as one of the top cities in the country to start a business, with a thriving startup ecosystem, skilled workers, and a strategic location.

Vietnam ranks 59th in the ease of doing business, a significant improvement from the previous ranking, indicating the country's continued efforts to create a supportive environment for businesses.

Foreign investors can also take advantage of the Vietnamese government's tax incentives, such as a 10% preferential corporate income tax rate for 15 years for eligible projects, tax exemptions for the first four years, and a 50% reduction for the following nine years for certain sector projects.

In addition, Da Nang's location between Hanoi and Ho Chi Minh City allows for easy travel to other parts of the country, and the city has a robust ICT infrastructure with high-speed internet and cutting-edge technology. Overall, the city's low operating costs and import tax exemptions make it easier for businesses to get started and expand in Southeast Asia.

Pros:

• Supportive government policies for entrepreneurs, including tax incentives and grants for startups
• Low cost of living compared to other major cities in Vietnam
• Strategic location between Hanoi and Ho Chi Minh City for easy access to other business hubs in the country

Cons:

• Limited English proficiency among the local population, may make communication difficult for non-Vietnamese speakers.
• Limited access to international markets compared to other major cities in the region.
• Limited pool of talent compared to other major cities in the region, which may make it difficult to recruit skilled workers.

2. Chiang Mai, Thailand

Living in Thailand is like stepping into a magical world of ancient temples, bustling night markets, and breathtaking natural scenery.

Thailand ranks 21st in the ease of doing business. Chiang Mai has a thriving startup ecosystem, skilled workers, and a strategic location in the heart of Southeast Asia. Nomad List dubbed the city the best in Southeast Asia for digital nomads in 2020, and Forbes named it one of the top ten rising startup centers in the world in 2018. The government's Thailand 4.0 project, which aims to foster creativity and technology in the country, is helping to boost Chiang Mai's expanding startup culture.

Foreign investors can take advantage of Thailand's tax incentives, including a corporate income tax rate of 20%, and tax exemptions and reductions for certain projects. In addition, Chiang Mai's low cost of living and high quality of life make it an attractive location for entrepreneurs looking to start a business or relocate their companies.

Chiang Mai is also known for its rich cultural heritage, with over 300 temples scattered throughout the city. The city's location near lush rainforests, mountains, and waterfalls offers opportunities for outdoor adventures and exploration.

Additionally, Chiang Mai is home to a large digital nomad community, with co-working spaces and cafes catering to remote workers and entrepreneurs.

Pros:

• Reduced cost of living and business expenditures in comparison to other major Thai cities.
• A growing community of digital nomads and entrepreneurs that serves as a support network for startups.
• Availability of skilled labor, notably in the technology sector

Cons:

• In comparison to other major cities in the region, access to capital and investment possibilities is limited.
• Access to foreign markets is limited in comparison to other major cities in the region.
• Infrastructure and transportation may be less developed than in other major Thai cities.

3. Cluj-Napoca, Romania

Romania is like something out of a fairytale with its beautiful castles, rolling hills, and rich cultural heritage. Cluj-Napoca is a happening city located right smack in the heart of Transylvania, making it super easy to get to other cool cities nearby. In 2023, it's the hot spot for entrepreneurs, thanks to its strong technology industry and amazing research and development scene. According to the World Bank's 2022 report on ease of doing business, Romania ranks 45th. And get this, in 2019, Financial Times recognized Cluj-Napoca as the third-best city in Eastern Europe for foreign direct investment strategy. Plus, the Romanian government offers all sorts of tax breaks to woo foreign investment, like a lower corporate income tax rate of 16% and exemptions for eligible projects

Pros:

• Access to a pool of highly trained workers, notably in the technology industry.
• Government initiatives that help companies, such as tax breaks and subsidies.
• Low cost of living and business costs in comparison to other major European cities.

Cons:

• In comparison to other major cities in the region, access to capital and investment possibilities is limited.
• Access to foreign markets is limited in comparison to other major cities in the region.
• Non-Romanian speakers may face a language barrier.

4. Medellin, Colombia

Medellin has a lot to offer entrepreneurs, from its vibrant startup scene to its low cost of living. Plus, the city is home to some of the most friendly and welcoming people you'll ever meet.

It's no surprise that it's been named the 5th most innovative city in the world by the 2thinknow Innovation Cities Index 2021 and the 10th best city for doing business by the 2022 Global Cities Index.

But don't just take my word for it. According to the World Bank's 2022 report on ease of doing business, Colombia ranks 67th overall, making it a relatively easy place to start a business. And when it comes to Medellin specifically, the city has been recognized as a top destination for digital nomads, thanks to its affordable housing and coworking spaces.

And if you're looking for something to do when you're not working, Medellin has plenty of attractions to keep you busy. From the stunning Botanical Garden to the colorful Comuna 13 neighborhood, there's always something new and exciting to explore.

Pros:

• Increasing startup scene and government initiatives that assist entrepreneurs, such as tax breaks and grants.
• Access to a pool of highly trained individuals, notably in the technology business.
• Low cost of living in comparison to other major Latin American cities.

Cons: 

• Some businesses and investors may be put off by security worries.
• Access to foreign markets is limited in comparison to other major cities in the region, and limited English ability among the local people may make communication difficult for non-Spanish speakers.

5. Ljubljana, Slovenia

Ljubljana is a charming and picturesque city, with stunning architecture and a rich cultural heritage. But don't let its beauty fool you - this city is also a hub for innovation and entrepreneurship, with a thriving startup scene and a supportive community of business owners.

According to the World Bank's 2022 report on ease of doing business, Slovenia ranks 40th overall. And when it comes to Ljubljana specifically, the city has been recognized as one of the most business-friendly cities in Europe, thanks to its low taxes and streamlined regulations.

For instance, Newly established companies can benefit from a reduced corporate income tax rate of 19% for the first two years of operation, and there are additional tax credits and exemptions available for companies in certain sectors, such as research and development. Additionally, the European Commission has recognized Slovenia as a leader in innovation, with a strong focus on research and development.

But that's not all. Ljubljana is also a great place to live, with a high quality of life and a low cost of living. Whether you're looking for affordable housing or delicious food, you'll find it all here.

And when you're not working, there's plenty to see and do in Ljubljana. Take a stroll along the beautiful Ljubljanica River, visit the iconic Ljubljana Castle, or explore the charming old town with its colorful buildings and cobblestone streets.

Pros:

• Government initiatives that help companies, such as tax breaks and subsidies.
• Access to a pool of highly educated individuals, notably in the technology industry.
• Its position between Western Europe and the Balkans allows access to a variety of markets.

Cons:

• In comparison to other major cities in the region, access to capital and investment possibilities is limited.
• Access to overseas markets is limited in comparison to other major European cities.
• Non-Slovenian speakers may face a language barrier.

Bonus:

6. Tel Aviv, Israel

Tel Aviv is a bustling city in Israel that has become a hub for startups and entrepreneurs in recent years. In fact, according to a report by Startup Genome, Tel Aviv ranks as the sixth-best startup ecosystem in the world. This is due in large part to the city's thriving tech industry, as well as its highly educated workforce.

But starting a business in Tel Aviv isn't just about the tech industry. The city also offers a range of tax incentives and exemptions for businesses of all kinds. For example, there is a reduced corporate income tax rate of 12% for certain types of businesses, and there are also tax credits and exemptions available for companies engaged in research and development.

In addition to its business-friendly policies, Tel Aviv is a vibrant city with a rich cultural heritage and a high quality of life. From its world-class restaurants and nightlife to its beautiful beaches and parks, there's always something to do in Tel Aviv.

So if you're looking for a top unknown city to start a business on a budget, Tel Aviv should definitely be on your list. With its supportive business community, the strong tech industry, and the range of tax incentives and exemptions, it's a great place to launch your next venture.

Pros:

• Access to a pool of highly trained workers, notably in the technology industry.
• Substantial government support for business, including tax breaks and startup funding.
• Access to capital and investment possibilities, as well as well-developed infrastructure.

Cons:

• Expensive living and business expenditures in comparison to other major cities in the region Restricted access to regional markets owing to political instability and disputes.
• Some entrepreneurs and investors may be put off by security worries.