Texas takes the top spot, Rhode Island at bottom of Thumbtack survey
The best state for small business owners is Texas and the worst is Rhode Island, according to an annual survey revealed Tuesday.
The survey, conducted by technology marketplace Thumbtack, contends that the friendliest states and towns for small businesses offer easier or non-existent licensing requirements. On a city basis, the report called Manchester, N.H., the best and Hartford, Conn., the worst for small-business climate.
|Best Climates for Small Business|
|1. Texas||1. Manchester, N.H.|
|2. New Hampshire||2. Dallas, Tex.|
|3. Utah||3. Richmond, Va.|
|4. Louisiana||4. Austin, Texas|
|5. Colorado||5. Knoxville, Tenn.|
Thumbtack used survey responses from 17,633 small businesses across the United States. Most of the businesses were small service businesses with five or fewer employees.
Startup hotspots California and New York ranked as the fourth and fifth worst states for small business, according to the survey. That’s because the climate for small businesses in both states is “very difficult due to burden of regulations, state government and tax climate,” Thumbtack Chief Economist Jon Lieber said.
In both states and cities, training that helped small-business owners learn how to run a business and adhere to policies was most important in determining whether the location was small-business-friendly.
“These small businesses, because they’re so small, really value direct support from a city or a state,” Lieber said.
|Worst Climates for Small Business|
|1. Rhode Island||1. Hartford, Conn.|
|2. Illinois||2. Albuquerque, New Mexico|
|3. Connecticut||3. Buffalo, N.Y.|
|4. California||4. New Haven, Conn.|
|5. New York||5. Providence, R.I.|
Tax regulations and labor regulations were also important drivers on a state basis. For cities, licensing requirements that were either effective or non-existent and website experience, meaning the city has an easy-to-use website, were weighted highly.
Whether or not a city or state is viewed as friendly to small businesses is important for its economic welfare, Lieber said. A friendly city will not only attract more small businesses, but in the event of an economic downturn, more of its local workers will be able to make money by starting a small business.
Less-friendly cities are more dependent on large employers and could suffer more in an economic downturn, he said.
“That can hurt the city in the long run,” Lieber said.