Choosing the right state for a business is crucial to its success

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Jan. 24. With around 20% of new businesses failing within one year and inflation making entrepreneurship even more difficult, the personal-finance website WalletHub released its report on 2023’s Best & Worst States to Start a Business.

North Carolina didn’t crack the Top 10, but came in 11th.

To determine the most fertile grounds for planting and growing new ventures, WalletHub compared the 50 U.S. states across 27 key indicators of startup success. The data set ranges from financing accessibility to the percentage of residents who are fully vaccinated against COVID-19 to office-space affordability.

The top five states, in order of rank: Utah, Florida, Texas, Colorado and Idaho. The five worst: Rhode Island, New Jersey, West Virginia, Connecticut and Alaska in last place.

Outside of the current difficult economic conditions, there are plenty of other reasons that startups fail, with a “bad location” among the most common.

Best vs. worst

—Iowa has the cheapest average annual rent for office space, $12.08 per square foot, which is 2.2 times cheaper than in New York, the state with the most expensive at $26.66 per square foot.

—Mississippi has the lowest labor costs (median annual income), $46,511, which is 1.9 times lower than in Maryland, the state with the highest at $87,063.

—Massachusetts has the highest share of college-educated population, 44.50 percent, which is 2.1 times higher than in West Virginia, the state with the lowest at 21.30 percent.

—Wyoming has the most startups per 100,000 residents, 214.67, which is three times more than in West Virginia, the state with the fewest at 72.20.

According to U.S. Bureau of Labor Statistics data, about a fifth of all startups typically don’t survive past year one of operation, and nearly half never make it to their fifth anniversary. Staying afloat is difficult even under normal conditions, and even more so when dealing with a global pandemic, the highest inflation in decades and labor shortages.


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