Anyone else live in a smaller town (15,000 people or so), and run their business locally? If so do you find it hard to get customers or more easy? I am going to be planning to do mass advertising with flyers.
I would suggest actually going to the businesses, its alot more cost effective tham flyers, which usually just end up in the trash. Or, you could call the businesses. I would try to get some reputation in the community, join clubs, go to local charity events.
Word of mouth is your friend. Flyers aren't going to get anything done except get your name posted. If you want business and you are just starting out you need to be in personal contact with your clients making sure they know how to use your system and are happy. If you aren't willing to go and talk to friends first and then move to small businesses in the area and present yourself in person to them it will be hard for you to make a go at it.
Personally to me the size of the town would make no difference generally to your market....it's just a smaller market.
I think it depends on how you want to position your business. Are you trying to become the web hosting biz of choice for local businesses? Then work that market in the traditonal ways; get out and meet the business owners, find opportunities to educate business owners on the benefits of using your hosting, etc.
In the past I did a flyer campaign in our town of about 6500 people. It was a joint campaign with a local webdesign company and I think 1 client materialized from over 600 brochures that were sent out. Wasn't really worth it that I saw.