One of the best things about owning your own business is that you can choose to launch from anywhere. If you’ve thought about moving and are open to the idea, consider small business friendly states that have practices and policies that can help your business thrive.
One 2013 survey looked at several factors that make a state friendly (or not so friendly) to small businesses. For instance, how easy it is to start a business. And if the regulatory laws are prohibitive. Also, aspects such as employment, labor, and hiring climate. Lastly, they looked at licensing regulations. So what did the survey say?
Eight thousand respondents gave a surprising answer: Utah. The state best known for epic skiing and snowboarding and deserts grabbed the top slot as the most small biz friendly state. Why? Because of the ease of starting a new business in Utah and very straightforward regulations. Alabama, the runner up, also scored well across the board. Other positive reports came from New Hampshire, Idaho, Texas, Virginia, Kansas, Colorado, South Carolina, and Georgia.
You’ll note that no West Coast or Mid-Atlantic states made the list. Ouch.
A 2014 update to that survey included more considerations such as a state’s tax structure, zoning, and health and safety regs. Utah continues to be the star, but Texas, Idaho, and Virginia were close favorites. Colorado, Louisiana, Oklahoma, and Tennessee got high marks with Georgia and Kentucky close behind.
If we combine the lists, the top 10 are:
So what does all this mean to you as a small business owner? In short: Keep it simple. If you can choose any state in which to incorporate, look for those that make you jump through the fewest hoops. Additionally, you'll want a state with a tax structure that encourages both startups and growth. On the flipside, avoid states that have complex and stringent regulations. (Sorry, California, but we're looking in your direction.) Also, if you're flexible, consider a state that doesn't saddle you with too much of a tax burden. (Ahem! Illinois!)
It's interesting to note that many of the most small business friendly spots are also right-to-work states. That list includes Idaho, Texas, Utah, Oklahoma, Kansas, Alabama, Georgia, Louisiana, South Carolina, Tennessee, and Virginia. "Right-to-work laws do not aim to provide general guarantee of employment to people seeking work, but rather are a government regulation of the contractual agreements between employers and labor unions that prevents them from excluding non-union workers, or requiring employees to pay a fee to unions that have negotiated the labor contract all the employees work under." (source).
Of course, it all comes down to where your customer is. If what you offer is geographically agnostic, you've got a little more choice in the matter. But if your customer base is firmly rooted somewhere and you need to be near them, your already home! You also need to consider quality of life for you and your family: if you’d be utterly miserable living in Utah, no amount of business benefit should push you in that direction. When you launch a business you need to remember that you will be an employee of that business, and most companies work best when the boss is happy. So find that intersection of personal happiness and business benefit and you'll be on the right track.