Utah Most ‘Friendly’ State for Small Business

How friendly is your state to small business owners? Apparently very friendly, if you live in Utah or Texas—and not so friendly if you live in California. Utah took the top honors as the friendliest state to small business while Texas had three of the top five cities in the latest survey from Thumbtack.com and the Kauffman Foundation.

The Small Business Friendliness Survey obtains data directly from an extensive, nationwide universe of job creators and entrepreneurs in order to determine the most business-friendly locations. The top five states were Utah, Alabama, New Hampshire, Idaho and Texas. Utah scored highly across the board, particularly in the ease of starting a business and regulatory environment.

North Carolina was the most improved state—jumping from a C+ to a B+ on the strength of perceived improvements in the ease of starting a small business as well as tax codes and employment, labor and hiring.

According to the survey, small business owners were less concerned about tax rates and more concerned with professional licensing requirements—perhaps due to the finding that 40 percent of U.S. small businesses are subject to licensing regulations by multiple jurisdictions or levels of government.

"It is critical to the economic health of every city and state to create an entrepreneur-friendly environment," said Dane Stangler, director 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."

The bottom five states were Hawaii, Maine, Rhode Island, California and Illinois.

As mentioned, Texas was home to three of the top five cities—Austin, Houston and San Antonio. Meanwhile, California was home to three of the bottom five—Los Angeles, San Diego and Sacramento.

The grades were determined on a number of metrics, including:

  • Overall small business friendliness
  • Ease of starting a small business
  • Ease of hiring a new employee
  • Overall regulatory friendliness
  • Friendliness of health and safety regulations
  • Friendliness of employment, labor, and hiring regulations
  • Friendliness of tax code
  • Friendliness of licensing regulations
  • Friendliness of environmental regulations
  • Friendliness of zoning regulations
  • Availability of helpful training or networking programs


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