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Vermont in middle of pack for place to start a business

Submitted by tim on

Source: WalletHub

Vermont Business Magazine The Northeast did relatively poorly in a new report on the best states in which to start a business. Vermont, however, finished 20th "best" overall, which was second best in the Northeast (Massachusetts 18). In this study by WalletHub, Vermont did poorly on growth in number of small businesses (47) and length of work week (45) and best in amount of spending on incentives (3).

With President Donald Trump proposing to slash the corporate tax rate to 15 percent while startup activity trends upward for three years in a row and reaches pre-Recession levels, the personal-finance website WalletHub conducted an in-depth analysis identifying2017’s Best & Worst States to Start a Business.

To determine the most fertile grounds for planting and growing new ventures, WalletHub’s analysts compared the 50 U.S. states across 20 key indicators of startup success. The data set ranges from financing accessibility to availability of human capital to office-space affordability.

Best States to Start a Business Worst States to Start a Business
1 North Dakota 41 Arkansas
2 Texas 42 Alabama
3 Utah 43 Delaware
4 Oklahoma 44 Connecticut
5 Nebraska 45 Pennsylvania
6 Florida 46 Hawaii
7 Colorado 47 Rhode Island
8 Georgia 48 Maryland
9 Missouri 49 New Hampshire
10 South Dakota 50 New Jersey

Best vs. Worst

  • Iowa has the cheapestaverage annual rent for office space, $12.08 per square foot, which is 2.2 times cheaper than in New York, the state with the most expensive at $26.66 per square foot.
  • Mississippi has the lowestlabor costs (median annual income), $39,665, which is 1.9 times lower than in Maryland, the state with the highest at$74,551.
  • Mississippihas the lowestcost-of-living index, 86, which is 1.9 times lower than in Hawaii, the state with the highest at 167.
  • Massachusetts has the highestshare of the college-educated population, 40.5 percent, which is 2.1 times higher than in West Virginia, the state with the lowest at 19.1 percent.
  • North Dakota has the moststartups per 100,000 residents, 205.92, which is three times more than in West Virginia, the state with the fewest at 69.68.

Starting a business is never easy. According to USBureau of Labor Statisticsdata, about a fifth of all startups typically don’t survive past year one of operation, and nearly half never make it to their fifth anniversary.

But startups fail for different reasons, a “bad location” among themost common. Choosing the right state for a business is therefore crucial to its success. A state that provides the ideal conditions for business creation — access to cash, human capital and affordable office space, for instance — can help new ventures not only take off but also thrive.

Best & Worst States to Start a Business

Overall Rank
(1=Best)

State

Total Score

‘Business Environment’ Rank

‘Access to Resources’ Rank

‘Business Costs’ Rank
1 North Dakota 69.38 1 5 30
2 Texas 59.33 3 10 25
3 Utah 57.32 11 1 29
4 Oklahoma 56.80 6 28 1
5 Nebraska 54.34 5 23 8
6 Florida 52.68 9 22 15
7 Colorado 52.55 7 9 32
8 Georgia 52.32 13 14 10
9 Missouri 51.74 10 33 16
10 South Dakota 51.72 15 17 7
11 Montana 51.65 4 49 14
12 North Carolina 50.01 27 16 6
13 Alaska 49.92 2 35 44
14 Wyoming 49.64 12 24 23
15 California 48.25 8 3 48
16 Michigan 48.24 20 50 3
17 Virginia 47.34 17 13 33
18 Massachusetts 47.31 14 2 45
19 Kentucky 47.09 31 42 5
20 Vermont 46.83 28 21 27
21 Louisiana 46.55 30 32 17
22 West Virginia 45.79 44 39 2
23 Iowa 45.62 19 18 36
24 Wisconsin 45.36 18 46 28
25 Illinois 45.35 21 15 37
26 Washington 45.26 24 4 41
27 Tennessee 45.26 35 40 13
28 Mississippi 45.25 46 36 4
29 Ohio 45.23 22 45 22
30 Minnesota 44.66 16 12 39
31 Indiana 44.34 33 44 19
32 Idaho 43.99 36 47 11
33 Oregon 43.91 25 30 34
34 Kansas 43.85 38 25 26
35 Nevada 43.79 29 37 31
36 Arizona 43.76 37 38 21
37 Maine 43.65 26 48 24
38 South Carolina 43.42 42 41 12
39 New York 42.64 23 6 47
40 New Mexico 42.11 48 26 20
41 Arkansas 41.43 45 43 18
42 Alabama 40.92 50 31 9
43 Delaware 40.64 41 7 40
44 Connecticut 39.95 34 8 49
45 Pennsylvania 39.74 43 19 38
46 Hawaii 38.51 32 34 43
47 Rhode Island 38.41 47 29 35
48 Maryland 37.86 40 11 46
49 New Hampshire 34.68 49 27 42
50 New Jersey 34.54 39 20 50

Business Environment – Total Points: 50

  • Average Length of Work Week (in Hours): Full Weight (~7.14 Points)
  • Average Growth in Number of Small Businesses: Full Weight (~7.14 Points)
  • Startups per Capita: Full Weight (~7.14 Points)
  • Average Growth of Business Revenues: Full Weight (~7.14 Points)
  • Five-Year Business Survival Rate: Full Weight (~7.14 Points)
  • Industry Variety: Full Weight (~3.57 Points)
  • Entrepreneurship Index: Full Weight (~3.57 Points)
  • “Digital States” Survey Grade: Full Weight (~7.14 Points)

    Note: This metric is based on the results of the Center for Digital Government’s latest “Digital States Survey.” According to the center, “The Digital States Survey evaluates states’ use of technology to improve service delivery, increase capacity, streamline operations and reach policy goals and assigns each state a grade based on quantifiable results.”

Access to Resources – Total Points: 25

  • Financing Accessibility: Full Weight (~4.17 Points)

    Note: This metric was calculated as follows: Total Annual Value of Small-Business Loans / Total Number of Small Businesses
  • Venture Investment Amount per Capita: Full Weight (~4.17 Points)
  • Human-Capital Availability: Full Weight (~4.17 Points)

    Note: This metric was calculated as follows: Number of Job Openings per Number of Civilians in Labor Force – Unemployment Rate
  • Higher-Education Assets: Full Weight (~4.17 Points)

    Note: This metric measures the average university rank (based on U.S. News & World Report’s “Best Colleges Rankings”) and number of students enrolled per capita.
  • Share of College-Educated Population: Full Weight (~4.17 Points)

    Note: This metric measures the percentage of the population aged 25 and older with a bachelor’s degree or higher.
  • Working-Age Population Growth: Full Weight (~4.17 Points)

    Note: “Working-Age Population” includes individuals aged 16 to 64.

Business Costs – Total Points: 25

  • Office-Space Affordability: Full Weight (~3.57 Points)

    Note: This metric measures the per-square-foot cost of commercial office space.
  • Labor Costs: Double Weight (~7.14 Points)

    Note: This metric measures the median annual income of the city.
  • Corporate Taxes: Full Weight (~3.57 Points)
  • Total Effective State & Local Tax Rates on Mature Corporate Headquarters: Full Weight (~3.57 Points)

    Note: This metric is based on the Tax Foundation’s “Location Matters: The State Tax Costs of Doing Business” study.
  • Total Spending on Incentives as Share of GDP: Full Weight (~3.57 Points)

    Note: This metric is based on The New York Times’databaseof local and state government spending on business incentives, such as cash grants, property tax abatements and low-cost loans.
  • Cost of Living: Full Weight (~3.57 Points)

Sources: Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, Ewing Marion Kauffman Foundation, Center for Digital Government, National Venture Capital Association, Yelp, Indeed.com, U.S. News & World Report, Tax Foundation, The New York Times, U.S. Bureau of Economic Analysis, Council for Community and Economic Research, LoopNet and Federal Deposit Insurance Corporation.