Small Businesses Rate Utah, Idaho as Friendliest States

By Nathan Eddy

The Ocean State received an “F” rating in the survey, putting it at the bottom of the pile. The state’s capital, Providence, also ranked among the worst-performing cities, as rated by their small-business owners. The state scored low in employment, labor and hiring, and its best grade was a lowly “C-,” for training and networking programs.

California, the nation’s most populous state, which contains more people than the 21 least-populous states combined, also gave California an “F,” and its capital city, Sacramento, placed at the bottom of the cities list, along with Buffalo, N.Y. Illinois also received an “F,” while Connecticut and New Jersey both earned a “D.”

Small businesses in Texas, Utah and Idaho have rated their states in the top five every year the survey has run. The Lone Star state received high marks for zoning (“A+”), and its worst mark, for training and networking programs, still got an “A.” Utah was ranked first in overall friendliness, while Idaho’s best score was for employment, labor and hiring.

Awareness of training programs raised overall scores by 10 percent, while 76 percent of those who said they were aware of government-sponsored training programs for business owners ranked their local government as “somewhat” or “very supportive.” Yet only 8 percent of these said local government was unsupportive. Oklahoma, Maryland, Minnesota, and Idaho all received an “A+” for their training programs.

The friendliness of professional licensing requirements was the most important regulatory issue in determining a state’s overall friendliness to small businesses, according to the report. The ease of filing taxes closely followed licensing requirements as an important issue for small-business owners.

Tax rates were a less important factor than the ease of regulatory compliance in determining the overall friendliness score of a jurisdiction, a trend that the survey has indicated for years. Two-thirds of respondents said they paid their “fair share” of taxes—that is, they felt like they were neither underpaying nor overpaying. Nevada, Texas and Utah received top marks for the friendliness of their tax codes.

Small-business owners in Colorado Springs, Colo.; Boise, Idaho and Houston gave their cities the highest ratings for overall small-business friendliness on a citywide basis. Other Texas cities scored exemplary marks, including Dallas, San Antonio, Austin and Fort Worth.

With regard to health and safety regulations, the West Coast states were all grouped together at the bottom of the pile, while Texas, Virginia, South Carolina and Idaho all received an “A+” in this category. Connecticut and Rhode Island both failed in terms of health and safety.

Many of the coastal states also received poor marks for the friendliness of local- and state-level friendliness when it comes to environmental regulations. Iowa, Missouri, Kansas and Louisiana scored a solid “A” in this category, while Massachusetts received its lowest grade for environmental regulation friendliness.

The small, rural New England state of New Hampshire received its highest mark for ease of starting a business, far ahead of its neighbors. Michigan, Florida, California and Illinois received poor marks in this category, with no state scoring higher than a “D.” Other stand-out states for starting a small business were Tennessee, Georgia, Oklahoma, Iowa and Texas.