The purpose of this study was to assess the effects of a city smoking ordinance on local businesses. Representatives from 61 randomly selected restaurants and retail stores in Flagstaff, Arizona were interviewed to determine their perceptions of the ordinance's effect on their business. Eighty-seven percent of the respondents were business owners or managers. Gross sales data 12 months prior to and 12 months after enactment of the ordinance were also collected for two categories of retail stores. The vast majority of restaurant and store respondents believed that the ordinance had no effect on their business. Gross sales increased an average of 16 to 25.8 percent per store during the year following prohibition of smoking in retail stores. This study did not support the belief that city smoking ordinances have a negative effect on local businesses.