South Dakota was rated the friendliest state for entrepreneurs in a ranking released by the Small Business & Entrepreneurship Council. This is not at all surprising, since South Dakota was aggressively courting Minnesota small businesses when I lived in the Twin Cities.
"The 'Small Business Survival Index' for 2004 has been revised and expanded, including the addition of S-Corporation tax treatment, a new workers' compensation cost measure, and each state's status regarding regulatory flexibility statutes. The Index now analyzes 23 major government-imposed or government-related costs affecting small businesses and entrepreneurs, including an assortment of taxes and measures that reflect various regulatory costs, and computes an overall rating."
Here are the top ranked states:
1) South Dakota
2) Nevada
3) Wyoming
4) Washington
5) Florida
6) Michigan
7) Mississippi
8) Alabama
9) Colorado
10) Indiana
11) Texas
12) Pennsylvania
13) South Carolina
14) New Hampshire
15) Virginia
16) Tennessee
This list includes some states, like South Dakota, that may have historically been considered "unattractive" destinations to live by many people (by the way, I think South Dakota, although too cold, is quite a nice place). And the top list includes some states, like Michigan, that have fallen on hard times due to the downfall of traditional industries. This shows that markets can work between states. By breaking down barriers, these states can find ways to attract new jobs and new residents. This can also work for other public policy issues, such as education.
The SBEC ranked the following states the lowest:
37) North Carolina
38) Montana
39) Oregon
40) Ohio
41) Massachusetts
42) Vermont
43) Iowa
44) New Jersey
45) New York
46) Maine
47) Minnesota
48) Rhode Island
49) Hawaii
50) California
51) District of Columbia.
It is too bad to see North Carolina falling in these types of rankings. It was a great place to do business in the 1980s when we started out ventures there.
Find where your state ranks and get details on their methodology at sbecouncil.org.
