Wyoming, North Dakota, and Montana are ranked the best states to start a small business in the U.S.
GoCardless, a leading fintech for recurring payments, today unveiled a new report on the current state of small businesses in the United States. The new report, “The Best States to Start a Small Business,” compiles data and analysis from 12 key, publicly-available data sources, including authoritative bodies such as the Small Business Administration and the Bureau of Economic Analysis, to rank all 50 U.S. states and the District of Columbia in terms of how favorable they are for small business owners.
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With more than 90% of U.S. businesses considered to be small and medium-sized1, the importance of empowering small business owners with the knowledge of which states offer the best opportunities is made clear through this report.
KEY FINDINGS:
- WYOMING IS THE BEST STATE TO START A SMALL BUSINESS. Wyoming is ranked as the best state to start a small business due to its high disposable income, favorable taxes, and an existing precedent for small business success.
- CALIFORNIA IS THE STATE WITH THE STRONGEST SMALL BUSINESS LANDSCAPE. Notably for a large number of small businesses and high disposable income
- MONTANA IS THE STATE WITH THE GREATEST TALENT POOL. Montana was shown to have the largest percentage of employment by small businesses, the largest number of small businesses per thousand residents, and a well-educated populus.
- WASHINGTON IS THE STATE WITH THE LARGEST RECENT ECONOMIC GROWTH. The most recent data available shows that Washington state had the highest GDP growth rate of any state and had significant decreases in both unemployment and poverty rates from 2016 to 2019.
- SIX BEST STATES FOR FAVORABLE TAX RATES. Compared to a national average of 7%, Alaska (1.76%), Hawaii (4.44%), Wyoming (5.34%), Wisconsin (5.46%), Maine (5.5%), and Virginia (5.65%) all offered lower tax rates.
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Additional data included in this report covers the industries that dominate the small business world, the state with the most disposable income, the most educated state, and why some states ranked among the bottom of the list. The report includes a map that ranks every U.S. state, key takeaway data sets, the methodology behind the research, and a list of all data sources.
“Picking the right location for a business is critical. Access to the right talent, funding, and tax breaks can make the difference between success and failure for a fledgling enterprise,” said Pranav Sood, Vice President of Small Business at GoCardless. “However, outside of tech circles, the value of location doesn’t seem to be as widely discussed as it should be for U.S. small businesses. Our purpose in collating and reporting on this data is to showcase the states that perform the best against a few key metrics. And while there are some surprises in the results, it certainly provides some food for thought regarding the U.S. small business landscape.”
“The data that GoCardless presents in this report shines a light on geographic factors that small businesses should consider, such as talent pool, tax rates and economic growth,” said Tony Ward, President, Americas, at Xero. “For aspiring small-business owners, these findings could help guide them towards a more advantageous location. And for existing small businesses, the data could help uncover factors that may affect their operations.”
