If you have a new small or midsize business (SMB), several key factors can immediately impact its success. One of the most critical decisions a fledgling SMB owner can make is where to set up shop. Location matters – and studies show that location can determine how easily you can get your business off the ground.
We’ll explore the results of Thumbtack’s annual Small Business Friendliness Survey and look at how CNBC’s rankings compare.
No matter what state you operate in, ensure you’re familiar with federal and state labor laws and compliance requirements.
In its most recent Small Business Friendliness Survey, Thumbtack polled more than 2,800 SMB owners nationwide to determine how easy or challenging it was to start a business and handle operations in their home states and cities. Participants answered questions on topics such as local tax codes, licensing regulations and the ease of finding workers.
Since the last Small Business Friendliness Survey in 2021, many states’ and cities’ ratings have gone from A+ or A- to as low as F. Many small business owners are now worried about the economy, inflation and the future of their businesses.
“Current economic conditions and waning government support from the pandemic are leaving small businesses feeling worried about what the future holds,” explained Marco Zappacosta, co-founder and CEO of Thumbtack. “As inflation continues to impact a majority of industries, it’s crucial that government organizations, at all levels, band together to support small businesses.”
Thankfully, 80 percent of consumers at least consider using small, local businesses in their day-to-day, while 50 percent of that 80 percent say it’s a primary or strong consideration. Unfortunately, however, consumer support can only go so far. In fact, 21 states received an F for small business friendliness, regulations, taxes, training opportunities and more.
Business incubators are economic programs that support new businesses’ success by providing office space, professional services and advice.
The most recent Thumbtack survey’s best- and worst-ranked states differed significantly from the previous year, with many states receiving less support from the government.
According to the Thumbtack survey, here’s what you need to know about the best and worst states for small businesses:
Your industry and product may determine how favorable a particular area is for your business. For example, a fishing charter company could be a successful business in Florida, while a music production company should consider starting out in Nashville.
The Thumbtack survey asked small business owners their opinions about their states’ and communities’ friendliness. In contrast, CNBC’s poll ranked business-friendliness based on 86 metrics across the following 10 categories:
Both analyses agree that Florida and Texas are favorable environments for business creation. If you’re considering opening a new business and are researching locations, consider the factors most critical to your business and industry before deciding on a home state. For example, if you are self-employed and opening a sole proprietorship or consultancy, labor costs may not be crucial.
When choosing where to open a business, it’s also essential to consider where you’d like to live and prepare for retirement. After all, a positive work-life balance is key to business success.
Andrew Martins contributed to this article.