Thumbtack has released the results from the fourth annual Thumbtack.com Small Business Friendliness Survey. The study, drawing upon data from nearly 18,000 small business owners, provides new insights into state and local business environments across the nation.
Said Jon Lieber, Chief Economist of Thumbtack:
Small business owners on Thumbtack have consistently told us that they welcome support from their government but are frequently frustrated by unnecessary bureaucratic obstacles,. 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.
Some of the survey's key findings include:
Texas, New Hampshire, Utah, Louisiana, and Colorado gave their states the highest rating for friendliness to small business. Small businesses in Manchester, Dallas, Richmond, Austin, and Knoxville gave their cities the highest ratings.
In contrast, small business owners gave California, Connecticut, Illinois, and Rhode Island an "F," while Massachusetts, Maryland, and New York earned a "D" grade. Providence, New Haven, Buffalo, Albuquerque, and Hartford were the survey's worst-performing cities as rated by their small business owners.
Small businesses in Texas and Utah have rated their states in the top five every year this survey has run, while California and Rhode Island have been rated in the bottom five every year.
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.
Professionals who weren't required to have a license judged their cities and states in a more favorable light; however, respondents who were required to carry a license but said that complying with licensing rules was "very easy" were just as favorable towards their government as respondents who weren't required to have a license at all.
Entrepreneurs' perceptions of their tax burdens were among the least important factors in judging governments.
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.
Thumbtack.com has surveyed tens of thousands of small businesses quarterly since December 2012. The survey asked questions about how small businesses are feeling about the general economic environment and health of their business, such as:
How would you rate your company's financial situation today?
Have you attempted to fill any part-time or full-time positions over the past three months?
How do you expect the prices you charge to your clients or customers to change over the next three months?
Thumbtack.com and Bloomberg then used the survey responses to create a weighted index that demonstrates Small Business Economic Sentiment in one easy-to-understand number between 0 and 100 - an index score above 50 means sentiment is positive; an index score below 46 means sentiment is negative. The full methodology paper can be found here.
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