Best States to Launch a Startup Revealed

The Best State to Start a Small Business in 2018 Is ...

After comparing 50 states across 25 key indicators of startup success, Wallethub was able to determine the best and worst states to start a business in 2018.

Best State to Start a Small Business Is…

This year, Texas is tops by providing some of the ideal conditions for business creation. According to Wallethub, some of these conditions included access to cash, skilled workers and affordable office space.

For small business owners, these conditions play a critical role in establishing businesses but also ensuring their long term success. According to the Bureau of Labor Statistics (BLS) the survival rates of businesses is only 51.4% for the five year mark.

Wallethub looked at all 50 states examining business environment, access to resources and business costs, which were given 50, 25 and 25 points respectively. Additionally, these indicators were evaluated using 25 relevant metrics graded on a 100-point scale, with high scores representing the best conditions for new-business creation.

Everything from the average length of the workweek to job growth, financing, education assets, labor costs and more was evaluated.

Source: WalletHub

Key Takeaways

Following Texas in the number one spot with a total of 64.4 points, Utah, Georgia, Montana and Oklahoma rounded out the top five in this year’s survey with 63.41, 60.21, 58.9, and 58.67 points respectively. Florida, North Dakota, California, Arizona and Colorado also completed the top 10, with totals of 58.09, 57.94, 57.61 and 55.58 respectively .

The worst states to start a business was Hawaii at number 50 after amassing only 37.16 points of a possible 100. Four other states making up the bottom 5 five include New Hampshire at 38.11, Rhode Island at 41.88, Vermont at 42.53, and Pennsylvania at 42.81.

West Virginia, New Jersey, Connecticut, Maryland and Alabama rounded up the bottom 10 worst states to start a business. See all the states scores below.


The survey points out states may not have many of the best indicators to start a business, but still offer options individual entrepreneurs might be looking for.

For example, Iowa has the cheapest average annual rent for office space at $12.08 per square foot, but overall it ranks 39th on the list. On the other hand, New York has the most expensive rent for office space at $26.66 per square foot and it is 32nd on the list. Meanwhile in terms of business costs, New York is 49th, while Iowa is 30th.

At the end of the day, a host of different factors go into deciding on the best place to open your business. For example, you might be successful in Hawaii, even though it ended up near the bottom of this year’s list, and do badly in Texas, the number one state for startups.

The key is putting extra effort into your due diligence. If you do that, your business will probably succeed no matter where you open it.

Expert Opinion

Wallethub asked experts how national and state economic policies affect business creation. One of the questions was, “What measures can state authorities undertake in order to encourage entrepreneurs to start new businesses in their state?”

Professor of Practice at the McDonough School of Business at Georgetown University, Melissa L. Bradley, answered, “States can look at tax incentives tied to job creation, and look at tax breaks for companies that employ the hard to hire, or provide skills training.”

She went on to say, “States can streamline the incorporation and certification processes to reduce the burden of time and money. States can re-examine zoning laws to allow for equitable dispersion of business development in a community, and allow for local hubs and networks to evolve organically. States can also identify a staff person to help coordinate and support business — almost like an entrepreneur in residence for states.”

Photo via Shutterstock

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Michael Guta Michael Guta is the Assistant Editor at Small Business Trends and currently manages its East African editorial team. Michael brings with him many years of content experience in the digital ecosystem covering a wide range of industries. He holds a B.S. in Information Communication Technology, with an emphasis in Technology Management.

One Reaction
  1. This is perfect for small business owners who are looking for the best states to launch their startups. There are now more technology-based businesses.