These States Best for Small Businesses

States best for small businesses like this lemonade standAs a result of the recession, many people have considered starting their own small businesses. According to the Small Business & Entrepreneurship Council, however, there is a huge difference among states in how easy it is to operate such a business successfully. Its new report, the Small Business Survival Index 2010, shows which states are best for small businesses.

The report grades states on a number of factors that affect small business success, including:
  • Taxes (Personal and corporate income tax, personal and corporate capital gains tax, property tax, sales tax, excise tax, death tax, fuel taxes, and others)
  • Workman's Compensation costs
  • Regulatory costs
  • Government spending
  • Property rights
  • Health care policies (health savings accounts, regulations, mandates)
  • Energy costs
  • Crime rate
  • Right to work
  • Minimum wage
  • Tort liability costs
  • Per capita state and local government spending
  • Highway cost efficiency
Adding it all up, the study concluded that these were the 10 places least conducive to establishing a new small business:

51. District of Columbia
50. New Jersey
49. New York
48. California
47. Vermont
46. Maine
45. Rhode Island
44. Hawaii
43. Massachusetts
42. Minnesota

The index spread between the best (28.552) and the worst (86.825) represents a whopping 304% difference.

The watchword for starting a small business seems to be, "go west," as the top five states most friendly to small businesses all are west of the Mississippi. (Stop before you get to California, though.) The top 10 states are:

1. South Dakota
2. Nevada
3. Texas
4. Wyoming
5. Washington
6. Florida
7. Alabama
8. South Carolina
9. Ohio
10. Colorado

Where did your state finish? See the full report for details about how each state finished in each category.
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