Not all states are created equal when it comes to where to start a new small business. Some states, not surprisingly, are better fits for budding entrepreneurs than others. Now you might think that “better” means “cheaper” or “lower taxes” but these days that’s not what matters most for a small business. The Economist recently wrote that, “America’s states and cities have traditionally tried to attract businesses by offering them tax breaks and other cash incentives. Yet there may be a more effective way, and one which puts no strain on stretched budgets: make life simpler.”

We put on our research hats to figure out which states can make your life easier. We turned to rankings from Forbes, CNBC, and especially a prominent Thumbtack survey, which drew data from over 12,000 small business owners who rated their states across 11 categories (ranging from overall friendliness, ease of starting a business, licensing, regulations and more). Here are five of the best states to start – or run – your small business.


There’s a lot of reasons to settle your small business in Texas. The Lone Star State doesn’t just have the nation’s strongest economy, it’s primed to do even better (Forbes ranked it No. 1 in terms of growth prospects). Texas also has excellent infrastructure to support budding businesses, most notably an army of prosperous cities like Austin, Houston, Dallas, Fort Worth, and San Antonio. But what’s maybe the most impressive about Texas is how much it excels across the board in the areas that matter most to small businesses. In Thumbtack’s survey, Texas wasn’t just rated highly in some categories. It got an A and higher in every category. That pretty much makes it the valedictorian of states.


The Beehive State is a prime spot to launch a small business thanks to its ranking as one of the best states in the nation for access to capital and a deep tool of talent. Like Texas, it’s also positioned strong economically, and offers added benefits like low business costs and extremely small-biz friendly environments. All those things combined make for an enticing new home for any small business.


Idaho is a hotbed of new small business activity right now with a lot of new businesses having set up there in the last year or less. Entrepreneurs are obviously seeing encouraging things in the state, which means it’s probably a good time for others to make the small business leap there too. The state also offers low costs, strong labor supply, and business friendliness, but aspiring entrepreneurs should be especially encouraged by this: “Idaho had the highest share of entrepreneurs in the country who derived their primary form of income from their business.”


If you’re looking for a strong workforce to help launch your business, Virginia is the place for you: it’s ranked second in labor supply. Aside from its other virtues, the Mother State also offers an appealing consistency. The Thumbtack survey notes “Virginia has never earned less than an A for overall friendliness.” Dependability is always a valuable quality in a state when starting a small business.


Louisiana has a healthy combination of positive factors: good rankings in the cost of doing business and a welcomingly low cost of living.  The state also “took the top spot in the country for the ease of hiring new workers and the friendliness of its environmental regulations.” Even more impressive? “Louisiana improved 9 spots from its rating in 2013 to finish 5th overall.” That signals a significant improvement, one that other small business and entrepreneurs would benefit form capitalizing on.


Next Steps:  You’re busy. We get it. So why not let us do some work for you? By signing up for the weekly Small Biz Ahead Newsletter, you’ll receive hand-picked articles, How-Tos and videos covering the latest in small biz tools and trends. We’ll do the research while you spend your time where it counts: managing and growing your business.

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