Small businesses rate Idaho and Texas friendliest states, California and New York among least friendly, in partnership with the Kauffman Foundation, has released new data showing that Idaho, Texas, Oklahoma and Utah all earned A+’s for their friendliness towards small businesses.  In contrast, small business owners gave California, Hawaii, Vermont, and Rhode Island an ‘F’, while New York narrowly avoided this lowest category with a ‘D’ grade.  Top performing cities included Oklahoma City, Dallas-Ft. Worth and San Antonio.

There are a lot of “business climate rankings”, but there aren’t any that draw upon considerable data from small business owners themselves. The Small Business Survey is the only survey to draw data from an extensive, nationwide universe of job creators and entrepreneurs themselves in order to investigate the best places in the country to do business.

“6,000 small business owners have told an unusually nuanced story about what they value in their state or city government,” said Sander Daniels, co-founder of “Although Texas and Idaho clearly come out on top as the nation’s friendliest states towards small business, entrepreneurs value a lot more than just low tax rates. Easy-to-understand licensing regulations and well-publicized training programs are often overlooked as critical tools necessary to support small business.”

Some of the survey’s key findings include:

  • Texas had three of the top five cities (Dallas-Fort WorthSan Antonio and Austin), while California was home to the bottom three (Los AngelesSan Diego and Sacramento).
  • Small businesses said licensing requirements were nearly twice as important as tax rates in determining overall business-friendliness.
  • Among small business owners nationally, women were 9% more likely than men to feel supported by their state governments.
  • An important predictor of small business friendliness was whether small business owners are aware of the state or local government offering training programs for small businesses.
  • Nationwide, small businesses owned by politically conservative entrepreneurs were 17% healthier than small businesses owned by politically liberal entrepreneurs.
  • IdahoNevada and Delaware had the most small business-friendly tax codes; California and New Mexico had the least-friendly tax codes.
  • Nebraska small business owners were the most optimistic about their business improving during 2012, while Iowanswere the least optimistic.
  • The South was the most small business-friendly region of the country, while New England was rated the least small business-friendly.

The full results can be seen here and include full sets of rankings, dozens of easily searchable quotes from small businesses nationwide, regional comparisons within states, and Census data comparing states’ and cities’ key demographics against those of other states and cities.

“With comparatively few regulations or government oversight on small businesses, Texas is truly a small-business-friendly state.  For the most part, Texas refrains from imposing ridiculous regulations and requirements that only a large corporation can keep up with or afford, and this makes a big difference.” Roofer – Maud, Texas

Survey methodology surveyed 6,022 small businesses across the United States. The survey asked questions about the friendliness of states towards small business and about small business finances, such as:

  • “In general, how would you rate your state’s support of small business owners?”
  • “Would you discourage or encourage someone from starting a new business in your state?” and
  • “How would you rate your company’s financial situation today?” and Kauffman ranked states and cities against one another along 21 metrics.  The full methodology paper can be found here.

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