Nationwide Survey of Nearly 18,000 Firms Highlights Best States and Cities for Small Business — Thumbtack Small Business Friendliness Survey
Texas, New Hampshire, and Utah top annual rankings of small business friendliness, while New York and California are among the least friendly states
State and city governments that promote local business training and focus on ease of regulatory compliance are consistently perceived as being friendliest to small business, according to Thumbtack’s annual Small Business Friendliness Survey. Entrepreneurs’ perceptions of their tax burdens were among the least important factors in judging governments.
The survey, now in its fourth year, reached nearly 18,000 small business owners in the United States and asked them to rate their state and city governments across a broad range of policy factors. Thumbtack then evaluated states and cities against one another along more than a dozen metrics.
Thumbtack and Entrepreneurship
“Small business owners on Thumbtack have consistently told us that they welcome support from their governments but are frequently frustrated by unnecessary bureaucratic obstacles,” said Jon Lieber, Chief Economist of Thumbtack. “Given that there is a crisis of entrepreneurship in the United States, seen in the broad collapse of self-employment across industries and states, creating the right environment for business start-ups is more important than ever.”
For complete results, please visit https://www.thumbtack.com/survey/.
Best and Worst Climates for Small Business
|Top Ten Best-Ranked|
|Bottom Five Worst-Ranked|
Key Drivers of Business Friendliness
Licensing was again more important than taxes – When evaluating their cities, small businesses said the ease of compliance with licensing rules mattered far more than tax rates. Tax equity – the actual rate at which business owners pay taxes – mattered far less than any measure of regulatory compliance. For example, labor rules were 88 percent more important in driving state friendliness scores when compared to tax rates.
Effective licensing was just as friendly as no licensing – Small business owners who found licensing compliance to be “very easy” were just as favorable towards their city governments as respondents who weren’t required to be licensed at all. By contrast, licensed professionals in cities with complicated requirements or inconsistent enforcement reported the lowest approval rates.
Training experience was the top factor in both state and city rankings – Offering training on developing a business and navigating the local economic and policy environment was the single biggest factor that influenced perceptions of friendliness. In cities, training was 78 percent more important than the number two factor. On the state level, small businesses who had a positive training experience were 1.5 times more likely to rate their states as being very supportive.
High quality websites matter – Investing in a high quality, easy-to-use website that provides useful information and decreases the costs of regulatory compliance improves overall perceptions of a local or state government. Business owners who said their city had a “great” website ranked their cities 13 percent higher, while there was no difference in the rankings of business owners who were either unaware of or had had a bad experience on city websites.
Thumbtack surveyed 17,633 small businesses across the United States. The 36-question survey asked about the friendliness of states and cities toward small business, including specific questions about the regulatory environment for labor, tax, and licensing rules.
Thumbtack evaluated states and cities against one another along more than a dozen metrics. Respondents to the survey were largely very small service businesses with five or fewer employees. Every state in the country was represented, although only states with more than 50 responses and cities with more than 30 responses were given a grade.
Visit https://www.thumbtack.com/blog/2015-friendliness/ for information about survey methodology.
Thumbtack is a technology-based marketplace that connects Americans with experienced local professionals to help them accomplish more than 5 million personal projects each year. More than 150,000 small business professionals actively use Thumbtack each quarter, across nearly a thousand categories including house remodeling, event planning, and music lessons. Founded in 2009 and headquartered in San Francisco, Thumbtack has raised a total of $150 million from Sequoia Capital, Tiger Global Management, Javelin Investment Partners, and Google Capital.