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What states are friendliest to small businesses?

June 20, 2014

The annual Thumbtack.com survey of small business owners offers interesting findings.

At Hiscox we’re committed to doing everything we can to support small business. We not only want to help small business owners manage their risk, and offer advice on how to build and promote their business, we’re also interested in knowing about some of the obstacles that hold them back.  31% of small business owners in our recent survey cited regulation as the biggest impediment to their growth. But, just like we found that the threat of employee legal actions varies by state, so do the regulatory burdens they place on small business.

The 3rd annual Thumbtack.com survey of over 13,000 small business owners came out last week and ranks states and cities on their business friendliness.  There was some consistency in this year’s findings – California and Rhode Island were again rated in the bottom five (California was also the state with the highest probability of an employee legal charge, the people and weather might be friendly, but not so much the business climate out there). Small businesses again ranked Texas, Utah and Idaho as among the top five friendliest states for small business this year.  The most important factor to most small business owners surveyed was the friendliness of a state’s professional licensing requirements, closely followed by the ease of filing taxes.  Surprisingly less important were tax rates, in fact two thirds of respondents felt they were paying their “fair share” of taxes.  This stat strikes me as a little suspicious – the next small business owner I meet who is happy with the amount of taxes they’re paying will be the first.

Other notable findings from this year’s Thumbtack.com survey:

  • Only 19% of respondents said they were prepared for implementation of the Affordable Care Act
  • Female entrepreneurs were more likely than male entrepreneurs to say their state was business friendly, while male entrepreneurs had a more positive view on the economy
  • On a city level, Sacramento, Providence and Buffalo had the worst ratings of business friendliness from small business owners

An interesting study and a worthwhile read for anyone thinking of starting, moving or expanding their small business to a new state or city.