With around 1 in 5 new businesses failing within the first year and inflation making things even more difficult, the personal-finance website WalletHub has released its report on the Best & Worst States to Start a Business in 2025.
The aim of the report is to guide people in maximizing their chances of success by starting in the right location.
To derive the trends, WalletHub compared the 50 U.S. states across 25 key indicators of startup success. The data set ranges from financing accessibility to labour costs to office-space affordability.
The firm evaluated these dimensions using 25 relevant metrics, which are listed below with their corresponding weights. Each metric was graded on a 100-point scale, with a score of 100 representing the most favorable conditions for new-business creation. This led to the determination of each state’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.
Best States to Start a Business
- Florida
- Georgia
- Utah
- Texas
- Idaho
- Oklahoma
- Nevada
- Colorado
- Arizona
- Kentucky
In contrast, the data also highlighted the worst states to start a business venture.
Worst States to Start a Business
- West Virginia
- Vermont
- Pennsylvania
- Hawaii
- New Hampshire
- Maryland
- Alaska
- New Jersey
- Connecticut
- Rhode Island
Within the rankings there are some variations of interest. For instance, Iowa has the lowest average annual rent for office space. This is 2.2 times cheaper than in New York, where it is most expensive.
Taking employment costs, Mississippi has the lowest labour costs (median annual income). These low wage rates, while not welcomed by workers, are 1.9 times lower than in Maryland, which has the highest (and therefore pays better wages).
For employees seeking employees with a good basic level of education, Massachusetts has the highest share of the population with a college education two times higher than in West Virginia, which has the lowest.
On the basis of business success, as measured by the number of start-up ventures, here Wyoming has the most startups per 100,000 residents. This stands as 3.7 times more than in West Virginia, which has the fewest.
