Idaho, Texas, Oklahoma, and Utah all scored A+’s for their treatment of small business while California, Hawaii, Vermont, and Rhode Island received F’s.
Massachusetts, Michigan, Connecticut, and New York all scraped by with D’s.
“Six thousand small business owners have told an unusually nuanced story about what they value in their local government,” said Sander Daniels, co-founder of Thumbtack.com., according to the Kauffman Foundation’s press release.
The study’s conclusions are based on data collected from over 7,000 respondents, 6,022 of whom answered questions regarding demographics and the economic health of small business in their state, according to the survey’s methodology.
However, it should be noted that although more than 6,000 small businesses in Thumbtack’s database of 275,000 members responded to the survey, the ranking excluded Alaska, North Dakota, South Dakota, West Virginia and Wyoming because they received fewer than 10 respondents, according to CNN Money.
Here are a few of the categories survey respondents were asked to rank:
- Overall small business friendliness
- Ease of starting a small business
- Cost of hiring a new employee
- Overall regulatory friendliness
- Friendliness of health and safety regulations
- Friendliness of employment, labor, and hiring regulations
- Friendliness of tax code
- Friendliness of licensing regulations
What were some of the major findings of the “business-friendly” study?
For starters, Texas has three of the five highest ranked cities on the list (Dallas-Fort Worth, San Antonio, and Austin) while California has three of the lowest rated (Los Angeles, San Diego, and Sacramento).
Furthermore, and perhaps a little more surprising, many small businesses owners said licensing laws were “nearly twice as important as tax rates in determining overall business-friendliness.” This is interesting considering that the Institute for Justice has just released a report, titled “License to Work: A National Study of Burdens from Occupational,” that argues occupational licensing requirements are an oftentimes unnecessary, unreasonable, and costly burden on workers and business owners.
“Although Texas and Idaho clearly come out on top as the nation’s friendliest states towards small business, entrepreneurs value a lot more than just low tax rates. Easy-to-understand licensing regulations and well-publicized training programs are critical tools necessary to support small business,” Daniels said.
But perhaps more important than the demographic information is the fact that the Kauffman/Thumbtack study comes with some interesting political implications.
“Asking entrepreneurs to rank state friendliness to their businesses is a powerful resource for helping policymakers understand the needs of business owners and for helping aspiring founders understand the full dimensions of their business environment,” said Dane Stangler, director of research at the Kauffman Foundation.
This story has been updated.