The Best Small Business States

Be warned: The rankings might surprise you!In an exclusive ranking study conducted by the Small Business & Entrepreneurship Council last October for, South Dakota topped the list. Key factors were the positive tax and regulatory environment for entrepreneurs.Other high scorers were Nevada, Florida and Wyoming. Low rankings were held by New Jersey, California and Iowa, to name a few.Fortune Small Business’s list of who loves small business is based on the SBE Council’s Small Business Survival Index, which rates the 50 states and Washington, D.C. according to some of the major government-imposed or -related costs affecting investment, entrepreneurship, and business.The list measured states on 29 criteria, including tax rates on income, property and capital gains; health-care regulations; crime rates; government spending; bureaucracy; and labor costs. The Index focuses only on public policy measures, so indicators such as workforce availability, education, or skill, or affluence of the population are not included.The study also notes states with some of the lowest energy costs, based on a combination of electricity costs and gas prices, with West Virginia, Arkansas and Idaho.A similar study was conducted and published just this past July. In a ranking measured by Bizjournals, Florida was ranked the best state for growing a small business, with four top rated markets having experienced solid growth in population and business since 2000.Bizjournals used a 12-part formula to rate small-business strength in the nation’s 75 largest metropolitan areas, looking to identify those areas that are most favorable to the creation and cultivation of small businesses.Springfield, Mass. ranked low on the standings, which means that it’s America’s weakest major market for small-business vitality, according to the study. More information can be found at’t live in one of the top states? Not the end of the world. The study inherently reflects more of a state’s policy climate not necessarily the current economic trends.However, there are published metrics and indicators that help paint a more holistic picture of what the environment is like for small businesses across the country. The condition of small businesses in the United States, each of the 50 states, the District of Columbia and the U.S. territories is illustrated in Small Business Profiles for the States and Territories, published in 2006. Each state profile contains sections on the following topics: the number of firms, industry composition, small business income, banking, women and minority business ownership, and employment ( a ranked list and additional details from the study results, visit

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