5 Awful Places to Start a Business

Kelly Spors

When most entrepreneurs decide where to locate their business, they think about things like market demographics and the local economy. But there’s something more basic they perhaps should consider first: The likelihood of an extreme-weather event.

Severe weather, from hurricanes to tornadoes to floods, can take a large toll on small businesses—wiping out revenue and even forcing businesses to close for good. Hurricane Sandy caused more than $250,000 in damage at 19,000 businesses in New Jersey and caused total business losses of $8.3 billion, according to a report by the National Hurricane Center.  Nearly 40% of small businesses never reopen their doors after a disaster, according to the Federal Emergency Management Administration (FEMA)

So where are the worst places in the U.S. to have a small business when it comes to extreme weather? Here are five:

1. The Gulf Coast.

As we enter Atlantic hurricane season, many towns along the Gulf of Mexico in the south are bracing themselves, and they should be: Florida, Louisiana and Texas are the top three states for hurricane landfalls since 1851, according to the Atlantic Oceanographic and Meteorological Laboratory in Miami. The worst state, by far, is Florida, which receives 40% of all U.S. hurricane landfalls.

2. Florida.

Oklahoma’s “Tornado Alley,” as it’s often referred—gets a bad rap when it comes to tornadoes. But it’s the Sunshine State that actually has the most tornadoes on average compared to its landmass. Florida gets on average 12.3 tornadoes each year per 10,000 square miles, according to an analysis by Dr. Greg Forbes, the severe weather expert for the Weather Channel. “Several things contribute to there being a lot of tornadoes in Florida,” Forbes told Weather.com “It’s surrounded by water so they can get tornadoes any month. Also, Florida is the thunderstorm capital of the United States. It has the most thunderstorms per square mile and some of those storms produce tornadoes.” No. 2 and 3? Kansas and Maryland, respectively.

(Do you have the right coverage if severe weather strikes? Find our with our Commercial Property Insurance Guide.)

3. New York.

Certain parts of the U.S. require flood insurance due to the risk of flooding. But there are a couple places that are at very high risk of flooding and have very high cleanup costs. An analysis by the World Bank found that Miami, New York and New Orleans all have high flood risks along with very high cleanup costs.

4. Upstate New York.

Snow can be just as disastrous as water to businesses, especially when it leads to major power outages. Several cities in upstate New York, including Syracuse and Rochester, are among the snowiest in the nation, according to Weather.com. Of course, it can be far more disaster-like to get snow in a city that doesn’t know how to deal with it. Don’t forget what happened in Atlanta in early 2014 due to a minor snowstorm.

5. California.

Droughts pose risks to many industries, and large swath of California experienced one of the worst droughts in U.S. history. Since 2000, the longest duration of drought in California lasted 376 weeks beginning on December 27, 2011 and ending on March 5th, 2019.

Of course, every part of the United States has its own weather risks. While you can avoid the most disaster-prone areas, it’s important to have a severe weather disaster-recovery plan regardless of where your business is based.

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10 Responses to "5 Awful Places to Start a Business"

    • Robert Hochhauser | October 1, 2019 at 11:28 pm

      Thanks

    • Julia Trusty | October 2, 2019 at 12:48 am

      Please notify me of articles pertaining to the Home Furnishings / Furniture and Window Covering Industries

    • Jim | October 2, 2019 at 5:48 am

      Hello Kelly
      Interesting read. I wonder what degree of consideration weigh that one should place on weather conditions? My sense is, not very much. I live and operate my business on the FL Gulf Coast in Sarasota County. We certainly do get an abundance of thunderstoms, tropical storms, heat and humidity, but if an entrepreneur is looking for a thriving business market, especially in the healthcare market, this area is the place to be. There is so much business opportunity here that the weather simply will not have any negative impact.
      That said, I used to run my business in upstate NY, and during the winter months, everyone hibernated. However, the NY state taxes have a far greater negative impact on business than the NY weather.

    • Tracy | October 2, 2019 at 11:00 am

      Noted that this article was written in October of 2014 but also saw it was last updated August of 2019 so…How did the author miss the drought news in California from March of 2019? “California is officially free of drought after more than seven years, drought monitors said Thursday. … Rainfall this winter further alleviated the drought, although 7 percent of the state remains “abnormally dry.”Mar 14, 2019”

      I think you should know that California isn’t very business friendly with our crazy state government, high gas taxes (which equal very high pump costs), horrible traffic, business taxes on everything from property, income and an annual fixed asset tax. Even with small evidence that incentives are being given to the movie industry to come back, women in business credits and SBA loans…CA is still a horribly expensive place to own a small enterprise business. But please correct the drought information.
      Thanks,
      Tracy B.

      • Chloe Silverman | October 2, 2019 at 3:13 pm

        Hi Tracy – Thank you for making us aware of this. We will be sure to edit this information. We appreciate your comment and feedback!

    • Joel Strellner | October 2, 2019 at 11:15 am

      California isn’t in a drought, and was out of it well before this article was last updated… https://www.drought.gov/drought/states/california

      • Chloe Silverman | October 2, 2019 at 3:24 pm

        Hi Joel – Thank you for making us aware of this! The correct information has now been added.

    • D Tran | October 2, 2019 at 1:42 pm

      Good to know before my next plan.

    • JACQUELINE SALYER | October 2, 2019 at 2:09 pm

      I wonder why the VERY high taxes in California wasn’t mentioned? We are definitely considering a move to another state…..

    • John Balanos | October 2, 2019 at 3:39 pm

      Weather is not the problem, its our taxes and state legislators that make it hell to do business in these states! California is terrible in terms of taxes and aggressiveness towards small business owners. Please don’t insult us with the weather, the weather is just fine here, we are making money, we are just dishing it out to Sacramento. Have a nice day!

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