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2017’s Best & Worst States to Start a Business

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Starting a business is never easy. According to U.S. Bureau of Labor Statistics data, about a fifth of all startups typically don’t survive past year one of operation, and nearly half never make it to their fifth anniversary.

But startups fail for different reasons, a “bad location” among the most common. Choosing the right state for a business is therefore crucial to its success. A state that provides the ideal conditions for business creation — access to cash, human capital and affordable office space, for instance — can help new ventures not only take off but also thrive.

In this study, WalletHub’s data team compared the 50 states across 18 key indicators of startup success to determine the most fertile grounds in which to launch and grow an enterprise. Read on for our findings, business insight from a panel of experts and a full description of our methodology.

  1. Main Findings
  2. Red States vs. Blue States
  3. Ask the Experts
  4. Methodology
Best & Worst States to Start a Business

Main Findings

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/36934/geochart.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2sozbZy;  

Overall Rank

State

Total Score

Effective

Annual

Difference

Annual

Adjusted

1 Alaska 5.69% $3,066 -46.85% $4,237 6  
2 Delaware 6.02% $3,246 -43.74% $3,830 1  
3 Montana 6.92% $3,728 -35.37% $3,561 3  
4 Wyoming 7.45% $4,015 -30.40% $4,312 2  
5 Nevada 7.72% $4,161 -27.86% $4,028 7  

 

Red States vs. Blue States

 

Ask the Experts

National and state economic policies can greatly affect business creation and the direction they take after launching. For insight into the ways in which different measures impact business, we asked a panel of experts to address the following key questions:

  1. Do you believe that the economic policies being pursued by the Trump administration will promote new-business development?
  2. To what extent do state policies, such as corporate tax rates, influence decisions about whether and where to start a new business?
  3. Are tax breaks and other incentives to encourage new businesses on net a good or bad investment for states?
  4. What measures can state authorities undertake in order to encourage entrepreneurs to start new businesses in their state?

Methodology

In order to determine the best and worst states to start a business, WalletHub’s analysts compared the 50 states across three key dimensions: 1) Business Environment, 2) Access to Resources and 3) Business Costs.

We evaluated those dimensions using 18 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the most favorable conditions for new-business creation.

Finally, we determined each state’s weighted average across all metrics to calculate its total score, which we then used to rank-order our sample.

 

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, Ewing Marion Kauffman Foundation, Center for Digital Government, National Venture Capital Association, Yelp, Indeed.com, U.S. News & World Report, Tax Foundation, The New York Times, U.S. Bureau of Economic Analysis, Council for Community and Economic Research, LoopNet and Federal Deposit Insurance Corporation.



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