I have written in the past about the divergent findings we see among the various rankings of cities, states and countries on their entrepreneurial and small business climate. Many of these rankings have very little to do with things that really matter to small business owners and everything to do with the authors' political agendas.
The evidence shows that what matters most in developing a climate that supports the creation of small businesses includes lower operating costs (including tax rates) and less regulation.
The National Dialogue on Entrepreneurship links to a a new study by the Millikin Institute that ranks states on the "cost of doing business."
The ranking considers wage costs, cost of electricity, and industrial/office rent costs, all of which are driven as much by state and local regulations as by the market. They also add in tax burden as part of the index. This is a simple index that looks at key factors that really drive business formation. In the end, it is the ability to make a profit that leads to new ventures, and the cost of labor, the cost of facilities and the cost of taxes make up much of the expenses that will determine a small business's bottom line.
The lowest costs can be found in:
South Dakota
North Dakota
Iowa
Montana
Idaho
Mississippi
South Carolina
Oklahoma
Arkansas
West Virginia
Alabama
Tennessee
The highest costs can be found in:
Hawaii
New York
Massachusetts
California
Connecticut
