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The Best -- and Worst -- Small-Business States

A new survey ranks where entrepreneurs will find the going easiest

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Nevada is the No. 1 place to be an entrepreneur, according to a survey that ranks states in terms of being friendly to -- or at least keeping their hands off -- small businesses. The sixth annual report by the Small Business Survival Committee, a business advocacy group headquartered in Washington, D.C., based its ratings on taxes, electricity costs, workers' pay rates, crime, and laws discouraging labor unions.

In descending order, the other top small-business states behind Nevada are: South Dakota, Washington, Wyoming, Florida, Texas, New Hampshire, Alabama, Mississippi, and Tennessee.

States ranked lowest on the SBSC index begin with Vermont, which came in 42nd., followed by New York, California, New Mexico, Minnesota, Kansas, Maine, Hawaii, and Rhode Island. According to the SBSC, the very worst place in the country for small businesses is Washington, D.C.

SECRET FORMULA?

  "In an increasingly mobile and competitive national economy, differences in government-imposed costs of doing business can make a huge difference between whether a state grows economically or falls behind," says SBSC President Darrell McKigney.

Maybe so. But a recent study released by the National Commission on Entrepreneurship and based on U.S. Census data put Utah atop the charts as the destination for high-growth companies. By contrast, the SBSC ranked Utah 34th.

The NCOE data indicates that more than a hands-off policy is needed for small businesses to thrive. Also important are factors like access to intellectual capital, strong computer-technology departments in state universities, and support from economic-development offices staffed by people with strong business backgrounds.

Perhaps a location's recipe for entrepreneurial success needs to be a good mix -- things like minimal red tape, access to tech-savvy workers, and proximity to a few good restaurants.

Here is the complete list of states and their rankings in the Small Business Survival Index 2001:

Rank State SBSI Score
     
1 Nevada 27.060
2 South Dakota 28.25
3 Washington 32.010
4 Wyoming 32.150
5 Florida 33.180
6 Texas 34.250
7 New Hampshire 36.250
8 Alabama 36.830
9 Mississippi 38.160
10 Tennessee 39.540
11 Colorado 39.870
12 Michigan 40.205
13 Illinois 40.290
14 Alaska 40.880
15 Virginia 41.310
16 Indiana 41.820
17 Missouri 42.213
18 South Carolina 42.520
19 Louisiana 43.304
20 Arizona 44.178
21 Massachusetts 44.755
22 Pennsylvania 44.880
23 Georgia 45.350
24 North Dakota 45.379
25 Arkansas 45.420
26 Idaho 45.590
27 Maryland 46.310
28 Oklahoma 46.920
29 Delaware 46.950
30 Wisconsin 47.380
31 Nebraska 48.430
32 Kentucky 48.610
33 Connecticut 48.830
34 Utah 49.242
35 North Carolina 49.590
36 Oregon 50.010
37 New Jersey 50.360
38 Montana 50.979
39 Iowa 51.073
40 Ohio 52.870
41 West Virginia 53.120
42 Vermont 53.514
43 New York 54.005
44 California 54.860
45 New Mexico 55.410
46 Minnesota 55.890
47 Kansas 55.980
48 Maine 56.150
49 Hawaii 57.235
50 Rhode Island 59.011
51 Dist. Columbia 65.335

For a copy of the "Small Business Survival Index 2001," you can visit SBSC's Web site at www.sbsc.org. SBSC is a national nonpartisan, nonprofit small-business advocacy group based in Washington, D.C.

By Robin J. Phillips in New York

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