One of the most important considerations when starting a business is where to start it. This sounds simple, but location can mean the difference between making it or not. For example, businesses just getting off the ground in places like New York City face higher costs than many others. Space is expensive there, whether that means a brick-and-mortar store or an apartment in which to live. Taxes are also high. If the new business hires employees, minimum wage is also higher than in many other locations. All of this influences the overall startup cost for a business.
Right now, it’s a good time to start a business, generally speaking. The economy is strong and all indicators point to a good climate for new small businesses. Recently, Seek Capital studied all 50 states and ranked them in terms of their suitability for entrepreneurs. The study took many different factors into account. These included everything from the age of the population to the survival rate for existing startups in the area.
One of the best states for entrepreneurial people is California. California is expensive. Rents are high and so are taxes. There’s lots of regulation in the state. However, there’s also plenty of funding for new businesses just starting to get off the ground. In 2018, over $77 billion in startup money was spent in California. North Carolina, Utah and Florida also received high marks. These states tend to have a lower cost of living. They’re full of great schools and highly motivated young people. There are also plenty of ways to get funding in these states.
By contrast, the Northeastern US is one of the worst places in the country to start a business. Four of New England’s five states made the list of worst places for entrepreneurs. Rhode Island has low entrepreneurship generally. The working population there is starting to age out of the workforce. Taxation is high, and so is regulation. There’s not much opportunity to find funding there. Maine, another New England state, has the highest startup failure rate in the country. Under 75% of startups make it to a second year. In short, all of the motivated young people in the region need to go elsewhere to really stand a chance of making it.