Best Cities for Small Business in Alabama
Alabama ranks #24 of 50 for small business, with a small business score of 58.7. Madison is its best city for small business at 81.2.
- Alabama, all states
- #24 of 50
- Population
- 60,106
Alabama for Small Business: The Full Picture
Alabama ranks #24 out of 50 for small business owners and entrepreneurs, with a mixed set of conditions for entrepreneurs. The state's fiscal health score of 56/100 is adequate, though fiscal conditions aren't a standout advantage.
Tax policy directly impacts the bottom line. Alabama's overall tax burden is 7.99% of income, with a 4.15% income tax rate that applies to both personal and pass-through business income. The 9.46% combined sales tax rate is on the higher side and worth factoring into pricing strategy. The economic environment (score: 50/100) with 2.9% unemployment indicates tight labor markets — good for consumer spending but potentially challenging for hiring.
Population growth of 0.58% is a tailwind — a growing customer base and expanding labor pool benefit most small businesses. Workforce quality may require investment in training — the education score of 49/100 suggests gaps in preparation. A typical home value of $241,613 helps attract and retain employees who can afford to live nearby.
All 20 Cities Ranked for Small Business
| # City | Grade | Small Business score | Overall | Household finances | Economy | Growth | Population |
|---|---|---|---|---|---|---|---|
| 1Madison | A+ | 81.2 | 72.1 | 91 | 89 | 98 | 60,106 |
| 2Vestavia Hills | A+ | 70.9 | 70.9 | 80 | 90 | 48 | 38,616 |
| 3Hoover | A+ | 68.4 | 67.9 | 78 | 79 | 53 | 92,642 |
| 4Alabaster | A | 63.5 | 64.3 | 67 | 70 | 56 | 33,917 |
| 5Daphne | B+ | 63.2 | 62.7 | 65 | 67 | 65 | 29,453 |
| 6Prattville | B | 57.6 | 57.3 | 56 | 65 | 57 | 39,482 |
| 7Huntsville | B | 57.5 | 56.8 | 50 | 61 | 61 | 222,791 |
| 8Northport | B | 56.5 | 57.0 | 53 | 65 | 53 | 31,218 |
| 9Opelika | C+ | 54.1 | 54.8 | 39 | 56 | 67 | 32,820 |
| 10Enterprise | C | 53.1 | 51.7 | 42 | 59 | 59 | 29,505 |
| 11Decatur | C | 51.6 | 52.2 | 43 | 56 | 47 | 57,361 |
| 12Auburn | B+ | 50.8 | 59.8 | 21 | 56 | 62 | 80,594 |
| 13Florence | C | 47.1 | 51.5 | 30 | 48 | 42 | 41,701 |
| 14Dothan | D | 46.3 | 47.2 | 29 | 51 | 48 | 71,514 |
| 15Mobile | D | 43.8 | 47.2 | 30 | 45 | 38 | 203,416 |
| 16Montgomery | D | 43.7 | 46.5 | 25 | 50 | 41 | 197,494 |
| 17Tuscaloosa | D | 42.3 | 48.3 | 16 | 46 | 44 | 111,038 |
| 18Phenix City | D | 40.8 | 45.3 | 17 | 48 | 39 | 38,499 |
| 19Gadsden | D | 39.1 | 44.4 | 6 | 40 | 45 | 33,374 |
| 20Birmingham | F | 38.8 | 41.1 | 15 | 43 | 38 | 198,173 |
City small business scores use each city's own data, with the category weights rescaled over the categories the city has; outdoor access has no city-level measure and is left out.
Compare: States with Similar Small Business Rankings
Also See: Alabama for Other Lifestyles
Frequently Asked Questions
Is Alabama a good state for small business?
Alabama ranks #24 out of 50 for small business with a persona-weighted score of 58.7/100. Its strongest relevant category is Affordability (86/100) and its weakest is Outdoor Access (7/100).
What is the best city for small business in Alabama?
Madison ranks #1 in Alabama for small business with a score of 81.2/100, followed by Vestavia Hills and Hoover.
What factors are most important for small business in Alabama?
Rankings weighted toward business-friendly tax climate, strong economy, population growth, workforce quality, and transportation infrastructure — what matters when starting or running a small business.