How friendly is your state and city towards small business? For the third year, the Kauffman Foundation and Thumbtack.com surveyed over 12,000 small business owners nationwide to see how they’d grade their small business friendliness. According to the survey, Utah, Idaho, Texas, Virginia and Louisiana gave their states the highest rating for friendliness to small business. Cities ranked the highest were Colorado Springs, Boise and Houston.
In contrast, small business owners gave California, Rhode Island and Illinois an “F,” while Connecticut and New Jersey both earned a “D” grade. Sacramento, Providence and Buffalo were the survey’s worst-performing cities as rated by their small business owners.
More than 12,000 entrepreneurs nationwide participated in this year’s survey. It is the only survey of its kind to obtain data from an extensive, nationwide sample of small business owners to determine the most business-friendly locations. The survey ranked 82 cities and most states on what makes a positive environment for small businesses.
“Creating a business climate that is welcoming to small, dynamic businesses is more important than ever, but rarely does anyone ask small business owners themselves about what makes for a pro-entrepreneur environment,” says Jon Lieber, chief economist of Thumbtack.com. “Thousands of small business owners across the country told us that the keys to a pro-growth environment are ease of compliance with tax and regulatory systems and helpful training programs.”
Some of the survey’s key findings include:
- The friendliness of professional licensing requirements was the most important regulatory issue in determining a state’s overall friendliness to small businesses. Closely following licensing requirements was the ease of filing taxes.
- Tax rates were a less important factor than the ease of regulatory compliance in determining the overall friendliness score of a jurisdiction. Two-thirds of respondents said they paid their “fair share” of taxes – that is, they felt like they were neither under-paying nor over-paying.
- Small business owners who were aware of training programs offered by their government were significantly more likely to say their government was friendly to small business than those who weren’t. 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,” and only 8 percent of these said local government was unsupportive.
- Only 19 percent of respondents said they were prepared for implementation of the Affordable Care Act.
- Female entrepreneurs were more likely than male entrepreneurs to say that their state government was friendly to small business, while male entrepreneurs were more likely than female entrepreneurs to have a positive view on the outlook of their state economy.
- Kentucky’s grade was this year’s most improved, jumping from a B- to an A.
“It is critical to the economic health of every city and state to create an entrepreneur-friendly environment,” said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation. “Policymakers put themselves in the best position to encourage sustainable growth and long-term prosperity by listening to the voices of small business owners themselves.”