A new study from Thumbtack and the Kauffman Foundation ranks U.S. states and cities based on overall small business friendliness. Nearly 8,000 small business owners responded to the survey, and the results show some clear winners and losers.
Interestingly, small business respondents were relatively unconcerned with tax rates. More than one out of two respondents believe they pay a fair amount in taxes.
In fact, 30% believe that professional licensing requirements are more important than taxes in determining a state’s overall friendliness to small businesses. A significant number of small business respondents (40%) indicated that they’re subject to licensing requirements by multiple jurisdictions or levels of government, so it’s not surprising that this is a big frustration for them.
Ten factors were included in the ranking process:
- Ease of starting a small business
- Ease of hiring a new employee
- Overall regulatory friendliness
- Friendliness of health and safety regulations
- Friendliness of employment, labor, and hiring regulations
- Friendliness of tax code
- Friendliness of licensing regulations
- Friendliness of environmental regulations
- Friendliness of zoning regulations
- Training and networking programs
When the results were tabulated, states and cities were ranked based on each of the 10 factors above and given an overall small business friendliness ranking. In addition to numeric rankings, states and cities were given letter grades (A+ to F).
Friendliest States for Small Businesses
The top 10 overall friendliest states for small businesses according to the study ranking are:
- Utah = A+
- Alabama = A+
- New Hampshire = A+
- Idaho = A+
- Texas = A
- Virginai = A
- Kansas = A
- Colorado = A
- South Carolina = A
- Georgia = A-
Least Friendly States for Small Businesses
The 10 least friendly states for small business overall according to the study are:
- Rhode Island = F
- Maine = F
- Hawaii = F
- California = D
- Illinois – D
- Michigan = D
- Connecticut = D
- Pennsylvania = D+
- New York = D+
- New Jersey = C-
Friendliest Cities for Small Businesses
The top 10 friendliest cities overall for small business according to this study are:
- Austin, TX = A+
- Virginia Beach, VA = A+
- Houston, TX = A+
- Colorado Springs, CO = A+
- San Antonio, TX = A+
- Nashville, TN = A
- Dallas-Fort Worth, TX = A
- Raleigh-Durham, NC = A
- Columbus, OH = A
- Salt Lake City, UT = A
Least Friendly Cities for Small Businesses
The 10 least friendly cities for small business according to this study are:
- Newark, NJ = F
- Sacramento, CA
- Cincinnati, OH = F
- San Diego, CA = F
- Los Angeles, CA = D
- Miami, FL = D
- Oakland, CA = D
- Honolulu, HI = D
- Pittsburgh, PA = D+
- Philadelphia, PA = D+
You can read the complete report and view interactive maps featuring all of the data from the 2012 and 2013 reports.
Susan Gunelius
Susan Gunelius is the Founder and Editor-in-Chief of Women on Business. She is a 30-year veteran of the marketing field and has authored a dozen books about marketing, branding, and social media, including the highly popular Ultimate Guide to Email Marketing, 30-Minute Social Media Marketing, Content Marketing for Dummies, Blogging All-in-One for Dummies and Kick-ass Copywriting in 10 Easy Steps. Susan’s marketing-related content can be found on Entrepreneur.com, Forbes.com, MSNBC.com, BusinessWeek.com, and more. Susan is President & CEO of KeySplash Creative, Inc., a marketing communications company. She has worked in corporate marketing roles and through client relationships with AT&T, HSBC, Citibank, Intuit, The New York Times, Cox Communications, and many more large and small companies around the world. Susan also speaks about marketing, branding and social media at events around the world and is frequently interviewed by television, online, radio, and print media organizations about these topics. She holds an MBA in Management and Strategy and a Bachelor of Science degree in Marketing and is a Certified Professional Career Coach (CPCC).
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