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Where to Start a Business: Best Cities and States Report

A new survey asked small business owners to rank their city and state on business-friendliness. Which came out on top?
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A recent survey found that Utah (yes, Utah) is the most small business-friendly state in the U.S., followed by Alabama, New Hampshire, and Idaho. When it comes to cities, Austin, Texas was ranked the most accomodating, followed by Virginia Beach, Virginia and Houston, Texas. 

The survey, conducted by Thumbtack and Kauffman Foundation, asked 7,766 small business owners to grade their states and cities on their a set of criteria, including ease of starting a business, regulatory friendliness, local taxes, employment, hiring, and license regulations. The survey also included free-form section where business owners could express their opinion on their location's business friendliness.

According to Sander Daniels, co-founder of Thumbtack and co-author of the study, majority of the feedback regarding Utah focused on the perception that state's regulations were fair and were reasonably enforced. Small business owners in Utah felt that the state fostered a cultured of entrepreneurship, of striking out on your own. 

While Alabama was perceived overall as a business-friendly state, it was New Hampshire's East Coast neighbors that helped it land in the third spot. 

"New Hampshire has fewer regulations than Massachusetts and that makes a big difference for us," a builder based out of Exeter, New Hampshire noted in the free-form section of the survey.   

Texas' top ranked cities, Austin and Houston, received high praise for the availability of free training programs and the communities' support of small businesses. A designer living in Irving, Texas explained that there is an effort to try to purchase from the local small business in his community.

"If your small business provides the service and earns the trust of the consumers, then the rest falls in place," he wrote. 

In the low ranking states such as Hawaii, Maine, Rhode Island, "many of the regulations were confusing, and businesses dealt with overlapping agencies. People are attuned to that," says Daniels.  

Small business owners felt that the low ranking states were more interested in making them jump through many hoops with variety of forms than in helping them start and grow their business and that regulations "felt almost like a penalty." 

Besides the fairness of regulations, small business owners in large expressed the desire for support systems such as mentor programs and networking opportunities within their area. 

"For them, owning a business is not just a job, it's their life, their passion. They are excited about meeting other people like them," explains Daniels. 

Last updated: Apr 3, 2013

JANA KASPERKEVIC | Staff Writer

Jana Kasperkevic is a graduate of Baruch College, City University of New York, where she earned a bachelors degree in Journalism and Political Science. She covers start-ups, small businesses, and entrepreneurship for Inc. Her work has appeared in The Village Voice, InvestmentNews, Business Insider, and Houston Chronicle, among others. She lives in Brooklyn.




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