What is the best state for small business operations?
You’ve likely heard the disheartening data on the survival rate of small businesses. Most fail early on, but a lack of energy and hard work isn’t always the reason. Location can make or break success, and a strong consumer base is only one part of its strategic importance. Taxes, zoning regulations, minimum wage laws, and climate are other factors that need to be considered and they vary from state to state. With the odds stacked against you, fortune doesn’t favor the bold so much as she does the prudent, and this article will help you determine what is the best state for small businesses and where yours stands the best fighting chance.
Knowledge is power. If you’re interested in opening a small business, the current market demands point to the growing RV and boat storage industry.
For Small Businesses, It’s Not A One-Size-Fits-All Approach
Choosing the best state for small businesses isn’t a one-size-fits-all affair, but should be approached on a case-by-case basis. One of the strongest factors to look at is the state’s tax climate. Some states, and even governments on the city or county level offer incentives for opening up businesses in them in the way of tax credits that could offset factors like property, income, and sales taxes that would otherwise be inhibitive. Conversely, the weather climate of a particular area might pose too substantial of a risk for small businesses, from wildfires, hurricanes, tornadoes, and the like.
Median incomes of an area you might be considering opening a business in is another thing to look at. These vary widely from state to state and being able to offer a liveable wage or not will have major consequences on a business’s ability to competitively hire good talent. Known as labor costs, you should expect to pay more the higher the median household income in a particular area.
Your small business’s market potential can be measured by consumer spending in a state. A good place to find information on a state-by-state basis for this is from the Bureau of Economic Analysis, and some of their data has gone into this article’s recommendation for the best state for small businesses.
Looking at the U.S. Small Business Administration Office of Advocacy’s 2020 Small Business Profiles, this recommendation also takes into account business survival rate to gauge the likelihood of small business success in different states.
So, What is the Best State for Small Business Operations
With these considerations above in mind, the best state(s) to operate a small business are:
- South Dakota