A new study finds a record number of small business are opening. So, where is the best place in America to start a small business?
A record 10 million small businesses have opened in the last two years with annual revenue reaching $13.3 trillion, according to the Small Business Administration. However, Lendio says “only 48.9% will survive five years as owners battle inflation, recession fears and colossal shifts in how Americans work and live. In the rapidly changing landscape, some states have emerged as prime locations for entrepreneurs.”
Lendio released a study on the Best States to Start a Small Business using the most recent data from the Bureau of Labor Statistics, Census Bureau, and Small Business Administration from 2016-2023. The rankings were determined by analyzing myriad factors including tax rates, startup survival rates, cost of living, educated worker migration, loans, funding, consumer spending, and incentive programs.
10 best states to start a small business in 2023
- North Carolina
- South Carolina
So, what makes Texas and Florida sit atop the rankings?
“Businesses in Texas consistently land loan dollars for their operations, with nearly $3 billion in small business loans approved in total,” according to Lendio. Of all businesses started in 2017 in the state, more than half survived five years of operations, outlasting those in many other states. According to Census Bureau data, nearly 100,000 people with bachelor’s degrees moved into Texas in 2021, making it a prime location for educated entrepreneurs to spread their wings.”
Texas also lacks a state income tax, which helps make it one of the most popular places for Americans to relocate.
As for Florida: “The Sunshine State sees more than half of its startup businesses survive to at least five years. It’s also a top recipient of small business loan dollars (11th compared to other states). Its entrepreneurs earned nearly $2 billion in 7a loans and $732 million in 504 loans from the U.S. Small Business Administration in fiscal year 2022.”
Complete state-by-state and national breakdowns are available in the complete study.