As the personal finance website WalletHub noted, starting a business is never easy.
According to U.S. Bureau of Labor Statistics data, about a fifth of all startups typically don’t survive past year one of operation, and nearly half never make it to their fifth anniversary. That’s without considering the economic damage done by the COVID-19 pandemic, which resulted in 200,000 more permanent business closures than usual within a year of the pandemic’s start.
Thus, choosing a state that provides the ideal conditions for business creation is crucial.
To determine the most fertile grounds in which to launch and grow an enterprise, WalletHub compared the 50 states across 28 key indicators of startup success. The website also compared the states across three key dimensions: 1) business environment, 2) access to resources and 3) business costs.
The rankings placed Virginia down at No. 41, making it the tenth worst state in which to launch a new business.
The indicators WalletHub used in the access to resources dimension to determine its rankings were financing accessibility, venture investment amount per capita, human-capital availability, higher-education assets, the share of the college-educated population, and the working-age population growth.
Across the business cost dimension, WalletHub used the following indicators: business costs, labor costs, average annual single insurance premium per enrolled employee, corporate taxes, the total spending on incentives as a share of the state’s GDP, office space affordability, and the cost of living.
Among the indicators WalletHub used in the business environment dimension were the average length of the work week, the share of engaged workers, the growth in the number of small businesses, the startups per capita, the growth of average business revenues, and the five-year survival rate.
The states that fell behind Virginia in the rankings were 42) Delaware 43) Pennsylvania 44) Missouri 45) Alaska 46) Wyoming 47) West Virginia 48) Rhode Island 49) Connecticut and 50) New Jersey.