Study: Famous Entrepreneurial Centers are Not Small Business Friendly

May 14th, 2012
in econ_news

Econontersect:  In contrast to some of the latest reports on innovation hubs, a survey small-businessSMALLby and the Kauffman Foundation ranks California, New York, Hawaii and Rhode Island as the least friendly states towards small businesses.  These states earned a failing grade of F.  On the other hand, Idaho, Texas, Oklahoma, and Utah rank as the friendliest ones towards small businesses.  Dealing with small businesses’ needs with high quality, earned these states an A+.   Failing cities are Tucson, Los Angeles, San Diego and Sacramento, while Dallas-Forth Worth, San Antonio, Austin, and Oklahoma City are ranked as the friendliest metropolitan areas.

Follow up:

The results were based on the perception of over 6,000 small businesses, around the country, about topics such as: hiring costs, ease of starting a business, regulations (health & safety, employment, labor & hiring, tax code, licensing, environmental, zoning), training programs, networking programs, current economic health (optimism about future, growth rate last year). When it comes to the topic of friendliness of a state towards small businesses, not only tax codes play a role. There is more on the table and owners are now aware of it.  As PRNewswire reported,

Small businesses said licensing requirements were nearly twice as important as tax rates in determining overall business-friendliness.”

The new rankings are a tool for the USA economy.  As mentioned by Dane Stangler, director of research at the Kauffman Foundation,

"Asking entrepreneurs to rank state friendliness to their businesses is a powerful resource for helping policymakers understand the needs of business owners and for helping aspiring founders understand the full dimensions of their business environment."

The prevalence of the rankings relies on the fact that owners have been given a tool for success. They are now aware of the reality that other businessman are facing. In the past, little research was focused on the actual perception of small business owners. Today, however, entrepreneurs can have better perspectives for their start-up businesses.

Some of the key findings from include:

  • Small businesses said licensing requirements were nearly twice as important as tax-related regulations in determining their state or city government's overall business-friendliness.
  • An important predictor of small business friendliness was whether small business owners are aware of the state or local government offering training programs for small businesses.
  • Among small business owners nationally, women were 9% more likely than men to feel supported by their state governments.

Written by Andrea Rangel


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