You're thinking about starting a business. Where should you go? To find the answer to this question, the folks at the personal finance site GOBankingRates have carefully examined all 50 states, considering a number of factors that include opportunities for start-ups, business climate, business taxes, cost of living, and many others. They've crunched the numbers and come up with the ten best--and ten worst--states in which to launch a new venture. Here are their top (and bottom) findings. You can see the full list here.
Best States for Entrepreneurs:
Yup, my new home state turns out to be the ideal place to launch a new business. It has the second-highest new business survival rate, after California, a high per-capita GDP, and a very favorable business tax climate. Not to mention, no state income tax. GOBankingRates also praises its high number of available employees, and that number is getting higher every day. The Seattle Times recently reported that Seattle's population is growing at a clip not seen since the Gold Rush. Which, come to think of it, the Amazon-fueled tech boom kind of resembles.
You were expecting, maybe, New York? Nope. GOBankingRates recommends Wyoming for its excellent business tax climate, highly productive workers, and the large number of small businesses already thriving there (although many of these are likely ranches). The state has a solid economy, but low college graduation rates. So if your business depends on hiring a lot of highly skilled technologists, you may want to look elsewhere.
You would expect the state with Silicon Valley in it to figure high on this list. Although California has both a high business tax rate and very high cost of living, it has the highest new business survival rate in the country, GOBankingRates found.
Reasons for this may include ample availability of business loans and a high unemployment rate that may make it easier to build a quality team. And you'll have plenty of peers to rub elbows with, since the state boasts 141 startups per 100,000 residents.
Worst States for Entrepreneurs:
1. West Virginia
This state has the worst new business longevity in the nation--117 business deaths for every 100 new businesses launched. It also has the lowest new-business density, with only 81.4 new businesses for every 100,000 residents. It also has the second lowest rate of small business lending. On the plus side is a higher-than-average supply of college graduates to hire. But that's not enough to pull West Virginia off the bottom slot.
I'm sorry to tell you that if you were looking for a good excuse to move to Hawaii, starting a business isn't likely to be it. Hawaii has the highest cost of living in the whole country. Put that together with one of the lowest rates of small business lending, and a low supply of college graduates to hire, and you see why Hawaii might be good a good place to learn to surf but a bad place to launch a new venture.
3. South Carolina
South Carolina has low GDP, low rate of business lending, and a low number of existing small businesses. Unfortunately, these factors outweigh the benefits of its low cost of living and business tax rates, which is why it has a low number of existing small businesses. And memories of this past summer's controversy over the Confederate Flag at the state capitol probably won't help matters.
There you have it: The three best and three worst states for starting a business. Do you agree or disagree with GOBankingRates' assessment? Let me know in the comments.