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Start Your Business Entrepreneurs

The 10 Best States for Women Entrepreneurs

The 10 Best States for Women Entrepreneurs
Credit: Dragon Images/Shutterstock

When you launch a new business, there are a lot of factors to consider, such as how to structure it, who to hire and how to market it. Another important decision that can help or hinder an entrepreneur's chances of success is where to start it.

A new study from Fundera found that, for women entrepreneurs, North Dakota and South Dakota provide the best climate for running a business. The two states top this year's rankings in part because they both have among the highest five-year growth in average revenue of women-owned businesses in the country.

Where to start a business is a decision more and more women are making. Research shows that, as of 2016, there were 11.3 million female-owned businesses in the U.S. In all, women are now the majority owners of 38 percent of the country's businesses, up from 29 percent in 2007. [See Related Story: Female Entrepreneurs Still Face an Uphill Battle with Financing]

Sutian Dong, a partner at Female Founders Fund, said that when choosing a potential location, there are several things women entrepreneurs should consider before making a decision.

"Think about what will drive success of your business – talent in that city, access to capital (whether through angels, venture capitalists, or debt providers), access to customers or suppliers a growing or robust entrepreneurial network, and most importantly, what will work for you personally – when you make a decision on where to start your company," Dong said in a statement.

To determine how each state ranked in terms of small business climate for women entrepreneurs, Fundera's analysts ranked all 50 U.S. states and the District of Columbia on 10 metrics in two categories:

Women entrepreneurship – 80 percent of total score

  1. Percent of women-owned firms in business for at least 11 years
  2. Percent of total businesses owned by women
  3. Percent of women-owned businesses with paid employees
  4. Five-year growth in number of women-owned businesses
  5. Average revenue of women-owned businesses
  6. Five-year growth in average revenue of women-owned businesses
  7. Percent of women with bachelor's degree or higher
  8. Number of SBA women's business centers

State economic health – 20 percent of total score

  1. Overall unemployment rate
  2. Number of businesses per 100 people

All the data for the study came exclusively from the Bureau of Labor Statistics, the Small Business Administration and the U.S. Census Bureau.

Based on Fundera's rankings, these are this year's 10 best states for women entrepreneurs:

1. North Dakota Fundera score: 73.04

  • The good: Ranks second in five-year growth in average revenue of women-owned businesses (119.4 percent); third in average revenue of women-owned businesses ($200,872); fourth in percent of women-owned businesses with paid employees (14.3 percent).
  • The bad: Tied for 27th in the number of SBA women's business centers (one); 49th in the percent of total businesses owned by women (30.8 percent).

2. South Dakota – Fundera score: 68.43

  • The good: Third in five-year growth in average revenue of women-owned businesses (95.4 percent); fifth in five-year growth in number of women-owned businesses (38.9 percent); 11th in average revenue of women-owned businesses ($166,579).
  • The bad: Tied for 27th in the number of SBA women's business centers (one); 51st in the percent of total businesses owned by women (30.1 percent).

3. Hawaii – Fundera score: 67.06

  • The good: Third in overall unemployment rate (2.9 percent); third in overall unemployment rate (2.9 percent); seventh in percent of total businesses owned by women (38.6 percent); eighth in five-year growth in average revenue of women-owned businesses.
  • The bad: Tied for 27th in the number of SBA women's business centers (one); 37th in five-year growth in number of women-owned businesses (19 percent).

4. Minnesota – Fundera score: 62.84

  • The good: Sixth in percent of women with bachelor's degree or higher (22.7 percent); 11th in five-year growth in average revenue of women-owned businesses (22.7 percent); 16th in overall unemployment rate (4 percent).
  • The bad: 35th in percent of total businesses owned by women (33 percent); 42nd in five-year growth in number of women-owned businesses (18.4 percent).

5. Virginia – Fundera score: 61.57

  • The good: 14th in percent of women-owned businesses with paid employees (12.2 percent); eighth in percent of women with bachelor's degree or higher (21.1 percent); 13th in average revenue of women-owned businesses ($162,126).
  • The bad: 32nd in percent of women-owned firms in business for at least 11 years (39.5 percent); 38th in number of businesses per 100 people (7.9).

6. Maryland – Fundera score: 61.37

  • The good: Third in percent of total businesses owned by women (40.1 percent); ninth in percent of women with bachelor's degree or higher (21 percent); 12th in five-year growth in average revenue of women-owned businesses (31.6 percent).
  • The bad: 34th in five-year growth in number of women-owned businesses (31.6 percent); 40th in percent of women-owned businesses with paid employees (9.9 percent).

7. Maine – Fundera score: 61.27

  • The good: First in average revenue of women-owned businesses ($233,434); fifth in number of businesses per 100 people (10.5).
  • The bad: 48th in percent of total businesses owned by women (30.9 percent); 50th in five-year growth in number of women-owned businesses (9.3 percent).

8. Iowa – Fundera score: 58.63 percent

  • The good: Fourth in five-year growth in average revenue of women-owned businesses (61 percent); 10th in overall unemployment rate (3.5 percent); 19th in percent of women-owned firms in business for at least 11 years.
  • The bad: Tied for 27th in the number of SBA women's business centers (one); 37th in percent of total businesses owned by women (32.7 percent).

9. Colorado – Fundera score: 58.14

  • The good: First in percent of women with bachelor's degree or higher (23.9 percent); fifth in overall unemployment rate (3 percent); sixth in number of businesses per 100 people (10.4).
  • The bad Tied for 27th in the number of SBA women's business centers (one); 41st in percent of women-owned firms in business for at least 11 years (36.4 percent).

10. Montana – Fundera score: 57.65

  • The good: Second in percent of women-owned businesses with paid employees; second in number of businesses per 100 people (11.1); 13th in five-year growth in average revenue of women-owned businesses (30.3 percent).
  • The bad: 41st in percent of total businesses owned by women (32.4 percent); 43rd in average revenue of women-owned businesses ($123.992).

Specific data for all 50 states and Washington D.C., as well as more information on the study's methodology, is available on the Fundera website.

Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.