NCPA - National Center for Policy Analysis

State Rankings for Small Business and Entrepreneurship

December 15, 2014

Which state is best for small business and entrepreneurship? According to a new report from the Small Business and Entrepreneurship Council, South Dakota tops the list, followed by Nevada, Texas, Wyoming and Florida. Rounding out the top 10 were Washington, Alabama, Indiana, Colorado and North Dakota.

The report, which analyzed the friendliest -- and least friendly -- policy environments, placed California dead last in its policy index, with New Jersey, New York, Hawaii and Minnesota not far behind.

The index looked at 42 different policy measures (the majority of which were related to taxes or regulation) and explained the rationale behind the rankings: "[T]he greater the governmental burdens -- via taxes, regulations, spending, debt, and failures to adequately and efficiently execute the essential duties of government -- the greater the negatives for economic risk taking, and growth in the economy, income and jobs."

Notably, the states that ranked at the top for business were also at the top of the list for economic performance. From 2010 to 2013, the top 25 states for small business saw 2.4 percent economic growth, compared to just 1.8 percent growth in the bottom 25 states. Moreover, people are moving to the business-friendly states -- from 2010 to 2013, the top 25 states saw a net population increase of 1,007,768, while the bottom 25 states lost 1,028,741 residents.

Source: Raymond J. Keating, "Small Business Policy Index 2014," Small Business and Entrepreneurship Council, December 2014. 


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