There is an old saying:  "If they are passing the hors d'oeuvres, you should take one." Right now, many states are passing out more than small nibbles. Despite the difficult economy, many states are creating attractive tax and hiring incentives for small businesses to start projects locally. These incentives taken as a whole can greatly reduce your cost of doing business and I suggest that they not be ignored.  Big companies regularly get incentives to locate a plant or a division in a particular state, and often city and county governments chip in, too. There are few malls, for example, that do not have some of their debt issued by cities in the form of tax free industrial revenue bonds.  

The thing that is somewhat new is the size and scope of the new incentives, and many are targeted to entrepreneurs in businesses ranging from video gaming to retail. Tax relief and local business boosterism  can also be used by a smart entrepreneur to approach civic-minded angel investors. If an angel is going to invest in a business, why shouldn't it be one that will take root in their local economy and help it thrive? The investment can be made with a strong sense of civic pride. (For you, a local angel can be a huge asset if they are able to share knowledge about attorneys and accountants and other services and connections.)  

In the early days of Atari, we located a factory for building coin-operated game machines in Ireland using very attractive incentives from the Irish Development Authority.  It was a great factory and we employed several hundred high- and medium-skilled workers for more than 30 years.  It was clearly a win-win both for us and for the local economy. The payroll taxes paid by our workers over the years were many multiples of the tax breaks we received. (The government provided us a building, a five-year tax holiday, and a few thousand dollars per employee for training). We would never have located in a tiny town in Ireland without the incentives.   

Today, Georgia, Michigan, North Carolina, and many other states have wonderful programs depending on your business. Look at their universities as well because they can be very helpful with hiring local talent.  

It is amazing to me that some high-tax, high-regulation states such as California and New York are trying to push business and entrepreneurs out of their states, while there are so many pro-business friendly states are going to great lengths to make business formation easier, cheaper, and more competitive in this global economy.