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The Most and Least Friendly States for Small Businesses

By | 04.15.13

The Most and Least Friendly States for Small Businesses

Thumbtack.com, in partnership with the Kauffman Foundation, recently published their annual survey rating the best and worst states in which to run a small business. The 2013 Thumbtack.com Small Business Survey canvassed 7,766 small business owners across the United States as to how supported they felt about the state they operate in, thus providing new insights into state and local business environments. Ratings were based on overall friendliness, ease of starting a business, ease of hiring, state and local business regulations, health and safety, employment/hiring and labor, tax code and tax related regulations, licensing, environmental, zoning, and training and network programs.

The top 5 rated states for 2013 were:

  1. Utah
  2. Alabama
  3. New Hampshire
  4. Idaho
  5. Texas

The worst 5 states in the U.S. for small businesses were:

  1. Hawaii
  2. Maine
  3. Rhode Island
  4. California
  5. Illinois

Notably, Texas was home to three of the top 5 cities (Austin, Houston, and San Antonio). The most improved state was North Carolina, which rose from a C+ to a B+ rating overall. Full ratings of individual states can be viewed on the Thumbtack.com website: http://www.thumbtack.com/survey#2013/states.

Several insights could be gleaned from the survey that reveal the current priorities of today’s small business owners. Interestingly, simpler professional licensing requirements were 30 percent more important than taxes in influencing a state’s “friendliness” rating—a metric that’s perhaps not surprising considering that 40 percent of all U.S. small businesses are subject to multiple licensing regulations from several government organizations and/or jurisdictions. In contrast, most small businesses were relatively unconcerned with tax rates, with over 50 percent of owners feeling that their tax burden was fair.

Also notable was that the ease of obtaining health insurance was an important factor for many businesses, with over 33 percent of small business owners rating the health insurance process for small businesses as “very difficult” and only 6 percent citing it as “very easy.” Other priorities included ease of hiring and the availability of local training and networking programs and other resources.

References

Axelton, Karen. “Which States Are Friendliest to Small Business?” Small Biz Daily. 4/10/13. (4/14/13.) http://www.smallbizdaily.com/11722/which-states-are-friendliest-to-small-business/.

Thumbtack.com. “United States Small Business Friendliness.” 4/10/13. (4/13/13.) http://www.thumbtack.com/survey#2013/states.

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