Here's the Best State to Start a Business — and the Worst, New Research Reveals Deciding where to launch your next venture could be just as important as the idea itself.
By Amanda Breen Edited by Jessica Thomas
Roughly three in five Americans have had an idea for an entrepreneurial venture, according to a 2021 Zapier report — but a staggering 92% of them won't take the steps necessary to bring their vision to life.
If you do want to start your own business (and avoid joining the latter statistic), considering where to launch might be just as important — if not more so — as determining what your next endeavor is.
Fortunately, new research from virtual receptionist service Moneypenny offers insight into the best and worst states to give entrepreneurship a shot.
Related: Starting a Business in 12 Easy Steps | Entrepreneur | Entrepreneur
After assessing all 50 states and the District of Columbia based on criteria including the number of SBA loan approvals so far in 2023, the level of state-levied corporate income tax, the average business survival rate and more, Moneypenny came up with the following ranking:
1. Ohio
7(a) loans 2023 approval count: 1,640
Score/10: 6.21
504 loans 2023 approval count: 53
Score/10: 1
Microloans 2023 approval count: 380
Score/10: 10
No. of cities in the innovation index: 6
Score/10: 5
Corporate income tax (based on lowest tax bracket): 0%
Score/10: 10
Total employer establishments (2020): 249,857
Score/10: 7.46
Total nonemployer establishments (2019): 817,642
Score/10: 7.64
Business failure rate (within one year): 18.7%
Score/10: 4.621
Average internet speed: 102.1
Score/10: 3.161
Cost of living: 91.3
Score/10: 9.273
Total score: 64
2. Washington
7(a) loans 2023 approval count: 636
Score/10: 2.33
504 loans 2023 approval count: 52
Score/10: .98
Microloans 2023 approval count: 23
Score/10: .58
No. of cities in the innovation index: 2
Score/10: 1.67
Corporate income tax (based on lowest tax bracket): 0%
Score/10: 10
Total employer establishments (2020): 194,967
Score/10: 8.02
Total nonemployer establishments (2019): 500,954
Score/10: 8.56
Business failure rate (within one year): 10.9%
Score/10: 10
Average internet speed: 149
Score/10: 6.57
Cost of living: 111.6
Score/10: 7.427
Total score: 56
3. Texas
7(a) loans 2023 approval count: 1,700
Score/10: 6.44
504 loans 2023 approval count: 125
Score/10: 2.41
Microloans 2023 approval count: 44
Score/10: 1.13
No. of cities in the innovation index: 6
Score/10: 5
Corporate income tax (based on lowest tax bracket): 0%
Score/10: 10
Total employer establishments (2020): 618,272
Score/10: 3.7
Total nonemployer establishments (2019): 2,658,054
Score/10: 2.32
Business failure rate (within one year): 18.2%
Score/10: 4.966
Average internet speed: 163.7
Score/10: 7.638
Cost of living: 92.1
Score/10: 9.2
Total score: 53
Colorado and Oklahoma round out the five top states for American entrepreneurs and startups, taking fourth and fifth place, respectively.
Related: 3 Things U.S. Startups Do Better Than European Startups
And the worst states to try your hand at business?
The unfortunate designation goes to Hawaii, primarily due to its 25.4% business failure rate; the District of Columbia, which has a 25.1% business failure rate and one of the highest corporate tax rates at 8.25%; and California, which boasts the most employer and nonemployer establishments — translating to significant competition.
