Utah Ranks 2nd Most ‘Business-Friendly’ State
UTAH– Starting a business can be very challenging. According to the U.S. Small Business Administration, about half of all new businesses fail within their first five years. There are countless factors that can undermine a company’s chances for success and ultimately doom it. While most of these factors – such as those related to product quality, pricing, and planning – can be blamed on poor management, a business’s chances for success can also depend on outside factors.
Across the United States, the environment in which businesses operate can vary considerably. Factors like regional policy, tax codes, infrastructure reliability, availability of skilled workers, and operation costs, among others, differ from one state to the next.
24/7 Wall St. created a weighted index of 42 measures to identify the best and worst states for business. These measures fall into one of eight categories: economic conditions, business costs, state infrastructure, the availability and skill level of the workforce, quality of life, regulations, technology and innovation, and cost of living. Data sources include the Bureau of Economic Analysis, the Bureau of Labor Statistics, and the Tax Foundation, a tax policy research organization.
While some states rank better than others for their overall business climate, every state has room for improvement, and usually states that share strengths in certain parts of our index also tend to also have weaknesses in other aspects of our index. For example, while a state like Massachusetts may have a skilled talent pool as measured by educational attainment, it also has a high cost of living that can force employers to pay more for that talent. These are America’s most and least educated states.
Massachusetts-based businesses and organizations were also granted over 7,600 patents in 2018, or 111.4 per 100,000 people, the most of any state and well above the national average rate of 49.5 patents per 100,000.
• 1-yr. real GDP change: +3.7% (8th best)
• Avg. earnings per job: $52,364 (14th lowest)
• Adults with a bachelor’s degree: 34.9% (13th highest)
• 2018 venture capital deals: 3.4 per 100,000 people (8th most)
Utah- Four of the top five states for business are located west of the Mississippi River, and of them, Utah ranks the highest. Startup companies in the state are also drawing far more venture capital investment than those in most other states. Utah companies drew in nearly $1.2 billion in VC funding in 2018, equal to $369 per state resident, more per capita than all but four other states.
• 1-yr. real GDP change: +3.5% (10th best)
• Avg. earnings per job: $61,617 (15th highest)
• Adults with a bachelor’s degree: 41.7% (2nd highest)
• 2018 venture capital deals: 5 per 100,000 people (4th most)
Colorado ranks just behind its neighbor, Utah, among the best states for business. As one of the top states, Colorado boasts a highly-educated workforce. Nearly 42% of adults in the state have a bachelor’s degree or higher, well above the 32.6% share of adults nationwide. There will also not likely be a shortage of labor in the state anytime soon. Over the next decade, the number of working-age state residents is projected to climb by 10.5%, more than double the comparable projected national growth rate of 4.6%.
• 1-yr. real GDP change: +5.8% (the best)
• Avg. earnings per job: $71,390 (5th highest)
• Adults with a bachelor’s degree: 36.7% (10th highest)
• 2018 venture capital deals: 4.9 per 100,000 people (6th most)
Businesses in Washington likely benefit from lower costs of operation in some areas. For example, the average price of electricity in the state is 8 cents per kilowatt-hour, less than in all but two other states. The tax climate in the state is also more favorable to businesses than in most other states, according to analysis conducted by the Tax Foundation.
Washington’s economy expanded by 5.8% between 2017 and 2018, more than any other state economy in the country. The state’s tech sector likely was partially responsible for this growth. There were about 99 patents granted in the state for every 100,000 people in 2018, nearly double the comparable national rate of 50 per 100,000.
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