Where in the US Does it Make Sense to Start a Business?
Counterintuitive as it may seem, many have predicted a boom in U.S. startups in 2021 and beyond. When economic catastrophe hits, as it did in 2020, a lot of people wind up facing financial difficulty. At the same time though, some of those same people have new incentives to thrust themselves into fresh pursuits or careers. Whether out of need or simply a desire to escape a tricky employment situation, a lot of people move out of recessions and into startups.
On top of this expectation, there’s also the chance that fresh federal aid could help to boost the economy more generally. Our take on ‘Biden’s Impact on the Stock Market’ included a note that the new presidential administration could bring about new economic stimulus. Politics aside, if there is a startup boom later this year, this kind of stimulus might just jumpstart consumer spending in a way that helps new businesses get off the ground.
One interesting question though, if indeed this proves to be the case, is where in the U.S. it will actually make the most sense to start a business?
Florida is maybe the most obvious choice in a conversation like this, for two simple reasons. One is that it’s one of a few states known for not taxing residents on income. This doesn’t benefit businesses directly, but it certainly appeals to new entrepreneurs seeking a home. Starting a business usually means pinching every last penny, and saving money on income tax can go a long way toward helping an entrepreneur make ends meet in the early days — and maximize earnings later on.
The reason Florida stands out even above other states that forego the income tax, however, is that it’s already a proven breeding ground for new businesses. An Entrepreneur piece on the best cities for startups published in mid-2019 included five Florida cities in the top 15 nationally. These cities (Orlando, Miami, Tampa, Jacksonville, and St. Petersburg) remain very attractive destinations for entrepreneurs, and feature vibrant small business economies that at this point are built to sustain further growth.
Utah sometimes gets overlooked in the West with regard to startup opportunities and business interests. Neighboring Colorado has a vague reputation as a tech hub (notably in Denver and Boulder); California and the Pacific Northwest are well known for booming startup cultures; even Wyoming, which borders to the northeast, is rising the ranks of trendy small business destinations. But Utah is a place entrepreneurs should consider carefully for three reasons: quality of living, startup density, and education levels (with World Population Review ranking Utah in the top 10 in education scores this year). All are impressive, and while these are simple factors, they lay the groundwork for startup success.
Nebraska is a less “obvious” selection than Florida, but stands out for its easy financing and simple registration processes for new businesses. Regarding the former, Lincoln, Nebraska actually featured in the same study the aforementioned Entrepreneur article reviewed. It ranked as the city with the “most accessible funding” for startups.
Where registration is concerned, the state of Nebraska has made it about as easy as possible for entrepreneurs to set up LLCs and other types of companies with the state government. As ZenBusiness’s guide to Nebraska LLCs describes it, only six quick steps are required to turn a business into a legal entity. This is actually the case in many states these days (which is good for entrepreneurs everywhere!). But Nebraska’s low filing fees for forms relating to registration are hard to beat, as is the fact that it can all be done online. Given this and the point on financing, Nebraska is just about as easy a state as you’ll find to fund and launch a new business in.
Massachusetts may raise some eyebrows on a list like this because it has a relatively high cost of living — which is something a lot of entrepreneurs want to avoid. By contrast however, the state is particularly appealing when it comes to education and productivity. University quality throughout the state is virtually unmatched throughout the country, which means that excellent potential employees are entering the job market continually. Additionally, the Massachusetts GDP broken down to a per capita level is among the highest in the nation, which essentially indicates that all those qualified university students go on to maximize their professional potential. There’s a lot to be said for setting up shop in an environment that is so naturally inclined toward success and growth.
In the end there’s at least something to like about just about any state for an entrepreneur. If we do see a spike in startups though, and entrepreneurs are looking for homes for their new businesses, these states hold noteworthy appeal.