In the tightening economic climate businesses are looking for any way to scale down expenses. For many, this means scaling down the size of the city businesses are calling home. Offering lower costs of living and higher standards of living, BusinessWeek reports that small cities are gaining ground in the business world, especially with startups.

The magazine recently listed the best small cities for startups in each state, weighing a number of factors in their selection: level of education in workforce, workers in “creative” professions, international talent, proximity to universities, availability of venture-capital funding and the number of small businesses per capita, to name a few.

The criteria didn't yield the stereotypical hot-spots like Silicon Valley or New York City. Instead, the list highlights places like Boulder, Colo., Bend, Ore., Tempe, Ariz. and Carmel, Ind.

Another factor these cities have in common is an availability of government incentives to lay down business roots. Those in Tempe can tap into a statewide angel investment program that offers tax credits to small business investors. Oregon offers a 50 percent tax credit for businesses supporting renewable manufacturing initiatives, and Eugene’s utility company matches that with a further offer, making energy bills equitable with pocket change in many cases.The information used to quantify these “best cities” is based on a tool called Geographic Information System Planning—a fancy information system that captures, analyzes and presents a variety of data, all linked to specific locations. Companies like ZoomProspector.com are capitalizing on the technology by offering governments, businesses and community organizations specific analyses on ways to promote economic development. They can determine everything from the number of patents issued to average household expenditures on ketchup.

The goal is to let companies know whether a move will be profitable or not, before they start packing boxes. And the majority of cities across the country offer the services in some form or another. In some cases, it’s even free. In the current economy, that’s an offer that will attract any business.

tags: angel investment, startups