When it comes to opening a business, New Hampshire not a good bet: study

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With around 20 percent of new businesses failing within one year and inflation making entrepreneurship even more difficult, the personal-finance website WalletHub today released its report on 2022's Best and Worst States to Start a Business as well as expert commentary.

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.

Best States to Start a Business Worst States to Start a Business
1. Utah 41. Maryland
2. Florida 42. Virginia
3. Texas 43. North Dakota
4. Colorado 44. Pennsylvania
5. Idaho 45. Wyoming
6. Georgia 46. Rhode Island
7. Arizona 47. New Jersey
8. Nevada 48. West Virginia
9. Oklahoma 49. Connecticut
10. California 50. Alaska

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.

To view the full report and your state's rank, please visit:

Please let me know if you have any questions or if you would like to schedule a phone, Skype or in-studio interview with one of our experts. Feel free to embed this YouTube video summarizing the study on your website. You can also use or edit these raw files as you see fit. Full data sets for specific states are also available upon request.

Expert Commentary

Which, in your opinion, are the best industries for starting a business in 2023, and what states are most likely to see an increase in start-ups activity?

"According to the United States Census Bureau, the top 5 states in numeric growth (2021 to 2022) are Texas, Florida, North Carolina, Georgia, and Arizona. Although there might be various entrepreneurial opportunities in different industries and states, I think that the automotive industry will continue to make a big transformation from the internal combustion engine to electric cars. There could be three major sectors in the automotive industry such as connected cars, autonomous driving, and electric vehicles. Each sector can be jointly developed by collaborating with big companies and high-tech startups. I expect that high-tech startups advancing in the automotive industry are likely to experience entrepreneurial growth."
Jae Hyeung Kang, Ph.D. - Associate Professor, Oakland University

To what extent do state policies - such as corporate tax rates - influence decisions about whether and where to start a new business?

"Tax rates and other state-level tax policies certainly influence business startup and location decisions, but the latest research suggests that other issues are at least as important. Business owners care more about access to suppliers and markets, transportation and communications infrastructure, amenities like parks and good schools for their employees, and supportive business policies other than taxes."
Donald Bruce, Ph.D. - Director, Boyd Center for Business & Economic Research; Professor, The University of Tennessee

"No doubt, state tax, and regulatory policies influence new business creation. Lower tax rates, more favorable workplace rules, and reduced licensing and permitting burdens, are examples of policies that would be favorable to business creation. That said, many entrepreneurs start new businesses in locations with which they are most familiar and based on other non-financial factors, such as where they live, where their network is strongest, and where the obvious market is. So, placed-based businesses, like retail establishments, may be less impacted by local policies. However, businesses that cater to a geographically broad market would be more likely to 'shop' for the optimal location. Further, established businesses looking to expand might expand or relocate entirely based on the relative favorability of the local business climate. Recently, Texas, for example, has been the beneficiary of some significant business relocations based on its business-friendly policies."
Richard Ryffel - Professor of Finance Practice (Part-time), Washington University in St. Louis

What measures can state authorities undertake in order to encourage entrepreneurs to start new businesses in their state?

"The main approach should be to provide a pro-business tax and regulatory environment that is viewed as fair and efficient for all taxpayers. Broad tax bases and low tax rates can raise the same revenue as narrow bases that result from carve-outs and incentives for a small number of businesses (which necessarily require higher tax rates on other taxpayers). Business startup decisions should be based on supply and demand, not tax breaks. Providing a fertile environment for all businesses will inevitably result in a more entrepreneurial climate with more startup activity."
Donald Bruce, Ph.D. - Director, Boyd Center for Business & Economic Research; Professor, The University of Tennessee

"Policymakers should be mindful not to erect barriers to business and regulatory policies, for example. Beyond that, ensuring that the local business 'ecosystem' is favorable to business formation is key. This would include investments in infrastructure and education, concentrating on fostering key industry clusters and encouraging collaboration amongst businesses, government, not-for-profits, and academia."
Richard Ryffel - Professor of Finance Practice (Part-time), Washington University in St. Louis

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