Small businesses account for 64% of new jobs created in the US. They are vitally important to the stability and well-being of communities and it benefits local governments to encourage small business development. But, according to a recent survey, not all states are equal when it comes to friendliness toward small businesses.

The Small Business Friendliness Survey, conducted by in partnership with the Ewing Marion Kauffman Foundation, found that there’s a wide range of friendliness, or non-friendliness in some cases, across the states. Gathering data from over 7,000 business owners nationwide, the survey then handed out grades from A through F to the states and their cities.

Utah, Alabama, New Hampshire, Idaho and Texas all received A’s while Hawaii, Maine and Rhode Island were given F’s. Among the individual cities, Austin, Virginia Beach and Houston received the highest scores while Newark received the lowest.

So, what makes a place small business friendly? The survey rated states and their cities on several factors including the state’s support of small businesses, whether small business owners would encourage or discourage others from starting a business where they live, the level of taxes small business owners pay and the general economic climate.

Other key findings from the survey include:

  • Texas had three of the top five cities (Austin, Houston and San Antonio), while California was home to three of the bottom five (Los Angeles, San Diego and Sacramento).
  • Professional licensing requirements were 30% more important than taxes in determining a state’s overall business-friendliness
  • North Carolina was the most improved state, making strides across multiple categories and rising from a “C+’” to a “B+” grade overall.
Cat Johnson


Cat Johnson | |

Cat Johnson is a content strategist and teacher helping community builders create strong brands. A longtime writer, marketing pro and coworking leader, Cat is the founder of Coworking Convos and