If you want to start your own business, and have a choice of where you can do so, you might want to consider a move out west, new research finds.
Six of this year's 10 best states for entrepreneurs, including the top five, are located in the western portion of the United States.
Topping this year's rankings from financial data website GoBankingRates is Washington, which offers small businesses a high chance of survival. In 2013, the number of businesses founded in the state was 3.5 times the number of failed businesses. In addition, Washington has a high per-capita GDP of $60,476 — the sixth-lowest business tax climate score in the nation — a large pool of potential employees and a high rate of small business lending.
Wyoming ranked as the second-best state for entrepreneurs, due to its high per-capita GDP, availability of employees and state-sponsored small business loans.
To determine the rankings, GoBankingRates used nine factors to assess the strength of existing small businesses and startups in all 50 states, as well as how favorable the state's business climate is for entrepreneurs. To measure the number of existing businesses and the quality of startup opportunities in the state, the number of existing small businesses per capita and the survival rate of small businesseswere examined. GoBankingRates also measured how favorable a state's business climate is to new entrepreneurs by measuring productivity in the state, availability of employees, education level of potential employees, taxes on businesses, lending to small businesses and costs. [What's Holding Young Entrepreneurs Back from Success? ]
Based on the rankings, this year's 10 best states for entrepreneurs are:
"Any entrepreneur who has the flexibility to set up shop where he or she chooses should certainly consider doing so in 1 of the 10 states we found that help small businesses thrive," Cameron Huddleston, GoBankingRates' Life + Money columnist, said in a statement. "There are plenty of factors in each of these states that boost the chances of success."
On the opposite side of the spectrum, West Virginia and Hawaii are considered the worst states for entrepreneurs. West Virginia ranked so low, in part, because of its high rate of failed businesses and low number of existing small businesses. For every 100 new businesses created in West Virginia in 2013, 117 businesses failed, the highest rate of business deaths in the nation. In addition, West Virginia's startup density is just 81.4 per 100,000 residents, the lowest in the nation.
Hawaii was the second-worst state for entrepreneurs because it has the highest cost of living in the nation and has high business taxes — factors that make it difficult for new business owners to succeed.
This year's 10 worst states for entrepreneurs are:
- West Virginia
- South Carolina
- Rhode Island
You can view the complete list to see where your state ranks by visiting the GoBankingRates website.