A recent study by WalletHub ranked all 50 states in regard to the environment for small business startups. The three main areas of consideration were the business environment, access to resources and business costs. Business Environment, included worker engagement, job and business growth and the variety of industries. Meanwhile the Access to Resources category included human capital, access to financing and worker education. Business Costs included taxation, labor costs and rent.
Texas Viewed as Top State to Start a Business
Overall, the report ranked Texas in first place for the business environment, with 64 points, but the Lone Star State came in 12th for access to resources and 16th for business costs. Utah came in second overall with 63.41 points. It ranked third for the business environment, first for access to resources and 33rd for business costs. With 60.21 points, Georgia took third overall. The state placed seventh for the business environment, 15th for resources and 17th in business costs.
Average Growth in Number of Small Businesses
The growth rate of small businesses indicates how well the overall economic environment is in a particular state. The best states for business environments were North Dakota, Texas, Utah, Florida, and Nevada. The worst in the same category were in Ohio, Vermont, Alabama, New Mexico, and West Virginia.
5 Best and Worst States to Start a Business: Access to Financing
The top and bottom ranking states in the access to resources category reveal how hard funding can be for small business. For example, Texas, the top state overall for starting a business, didn’t even make the top five in terms of access to financing.
Top 5 States for Access to Resources
- North Dakota
- West Virginia
Bottom 5 States for Access to Financing
- New Jersey
Alternative Financing for Small Businesses With Lendr
Unfortunately, if your business is a seaside jet ski rental, you can’t pick up roots and move to North Dakota or Utah, where funding is flush.
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Access to Resources Stats
The access to resources stats are revealing and useful for small business with more flexibility about where they hang their sign. The full ranking can be found in the WalletHub report. When analyzing what this ranking means for your business, keep the following stats, used to determine the ranking, in mind:
- Financing Accessibility: Full Weight
This is the Total Annual Value of Small-Business Loans divided by Total Number of Small Businesses
- Venture Investment per Capita: Full Weight
- Human-Capital: Double Weight
This metric is Number of Job Openings per Job Seekers – Each state’s Unemployment Rate
- Higher-Education Assets: Full Weight
- College-Educated Population: Full Weight
The percentage of the population 25 and older who earned a bachelor’s degree.
- Working-Age Population Growth: Full Weight 16 to 64-years-olds in the state
Making It Work Where You Are
North Dakota had the highest average growth in the sheer number of small businesses, with Utah and Florida close behind. The is great if you want to open up regional business in one of these business amenable state. However, what if you’re located in West Virginia, which ranked last in average growth, joined in the bottom three by Vermont and New Mexico? For instance, maybe you want to start a seasonal business as a ski instructor, based on your knowledge of Vermont’s best ski runs.
Labor Costs and Education
Labor costs are lowest in Mississippi, but the state came in 49th in education. This means that any business requiring a higher degree would have a difficult time finding enough qualified employees. The most educated state was Massachusetts, followed by Colorado and Maryland, but those states had relatively high labor costs. In these situations, an infusion of cash helps a business train employees in time to take full advantage of high revenue potential based on seasonality or other factors.
Start a Small Business With the Help From Lendr
If you’ve found a state that makes a great fit for your small business, but can’t obtain proper funding, contact Lendr.online to learn how to get the cash you need to start a small business.