Thumbtack.com, in partnership with the Ewing Marion Kauffman Foundation, recently released new data on governmental “friendliness” toward small businesses.
The Thumbtack.com Small Business Survey draws data from an extensive, nationwide universe of job creators and entrepreneurs themselves to investigate the best places in the country to do business.
“Six thousand small-business owners have told an unusually nuanced story about what they value in their state or city government,” said Sander Daniels, co-founder of Thumbtack.com. “Although Texas and Idaho clearly come out on top as the nation’s friendliest states towards small business, entrepreneurs value a lot more than just low tax rates. Easy-to-understand licensing regulations and well-publicized training programs are often overlooked as critical tools necessary to support small business.”
The top five friendliest states were scattered through the Midwest, Mountain West and South, and the five least friendly states could be found along the coasts:
|5 friendliest||5 Least Friendly|
|1. Idaho||1. Rhode Island|
|2. Texas||2. Vermont|
|3. Oklahoma||3. Hawaii|
|4. Utah||4. California|
|5. Louisiana||5. New York|
Idaho, Texas, Oklahoma and Utah all earned “A+” grades for their friendliness towards small businesses. In contrast, small-business owners gave California, Hawaii, Vermont and Rhode Island an “F,” while New York narrowly avoided this lowest category with a “D” grade. Top performing cities included Oklahoma City, Dallas-Fort Worth and San Antonio.
Other key findings of the survey:
- Texas had three of the top five cities (Dallas-Fort Worth, San Antonio and Austin), while California was home to the bottom three (Los Angeles, San Diego and Sacramento).
- Small businesses said licensing requirements were nearly twice as important as tax rates in determining overall business-friendliness.
- Among small-business owners nationally, women were 9% more likely than men to feel supported by their state governments.
- An important predictor of small-business friendliness was whether small-business owners are aware of the state or local government offering training programs for small businesses.
- Idaho, Nevada and Delaware had the most small-business-friendly tax codes; California and New Mexico had the last-friendly tax codes.
- Nebraska small-business owners were the most optimistic about their business improving during 2012, while Iowans were the least optimistic.
- The South was the most small-business-friendly region of the country, while New England was rated the least small-business-friendly.
“We were truly surprised about the importance that small businesses place on licensing regulations when rating the business-friendliness of their state or city,” Daniels told InvestorPlace. “The national conversation often revolves around whether tax rates are too high or too low — but it turns out that tax rates are an afterthought for very small businesses that are doing everything they can just to get off the ground. We did not expect to find that well-publicized training programs and easy-to-understand licensing regulations are the best predictors of small-business-friendliness.”
The full results can be seen here and include full sets of rankings, dozens of easily searchable quotes from small businesses nationwide, regional comparisons within states, and Census data comparing states’ and cities’ key demographics against those of other states and cities.
Kyle Woodley is the assistant editor of InvestorPlace.com.