The Friendliest States for Small Businesses: How Does Yours Rate?

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How would you feel about starting a business in Idaho? What about Oklahoma?  Though both states sometimes tend to fly under the business radar, a recent study by, in partnership with the Kauffman Foundation, suggests that these states are two of the best in which to operate a small business.

The study, which surveyed 6,000 small business owners all over the country in the span of a two month period, asked each participant to evaluate overall government friendliness toward small businesses and whether they would encourage a fellow small business owner to set up shop in their state.

Idaho, scoring at the top of the list with an overall A+ rating, ranked high in all areas including overall friendliness, ease of starting a business, regulations, health and safety, hiring, well publicized training programs, and low tax rates.  Interestingly, women owned businesses in Idaho felt significantly more supported by the state government than did the male business owners.  Oklahoma came in just below the larger state of Texas, which is home to three of the top five cities (Dallas-Fort Worth, San Antonio and Austin), ranking #3 with the overall “friendliest” score.

Though ranking high in training and networking programs for small businesses, Rhode Island is the nation’s lowest in overall “friendliness”.  California, home to the three lowest cities on the list (Los Angeles, San Diego and Sacramento), also had some of the worst tax codes, earning it an overall “F” score. Hawaii and Vermont joined Rhode Island and California at the bottom.

“Asking entrepreneurs to rank state friendliness to their businesses is a powerful resource for helping policymakers understand the needs of business owners and for helping aspiring founders understand the full dimensions of their business environment,” said Dane Stangler, director of research at the Kauffman Foundation.

Interestingly, Florida, a state ranking high on the 2012 Business Tax Climate Index, ranks fairly low in overall friendliness with a “C” rating.  The “unfriendliness” highlights the fact that other factors, like ease of starting a business, hiring costs, and training programs, are just as important to the success of small businesses as low tax rates.

Unfortunately, our area of New England ranked came out as one of the least friendly for small business.  How friendly is your state toward small businesses?