Where Are the Best States to Do Business?

By Rieva Lesonsky

Are you considering moving your business to a new location, or expanding outside your home state? Maybe you’re thinking about launching a second business, but you’re not crazy about the economic climate where you’re currently located. If any of these applies to you, you’ll want to take a look at CNBC’s special report on the best states for doing business. CNBC releases these results every year; the 2011 results will be out in late June, but in the meantime, I thought it was worthwhile to examine the 2010 results.

CNBC uses public data to score all 50 states on 40 measures of competitiveness, then separates those metrics into 10 broad categories (below), using input from business groups. Here are the 10 categories:

1. Cost of doing business looked at the tax burden in each state, including individual income and property taxes, business taxes and other taxes, as well as utility costs, average wages, state workers’ compensation insurance and the cost of office and industrial space.
2. Workforce measured the state’s average education level, the numbers of available workers and presence of union membership, as well as the relative success of each state’s worker training programs.
3. Quality of life included local attractions, the crime rate and health care.
4. Economy included the basic indicators of economic health and growth, economic diversity, and the number of major corporations located in the state.
5. Transportation and infrastructure can be important to any business. The study assessed the value of goods shipped by air, land and water, the availability of air travel in each state, and the quality of the roads.
6. Technology and innovation evaluated the states on their support for innovation, the number of patents issued to their residents, and the deployment of broadband services.
7. Education is important both in providing a good workforce and in attracting employees seeking good schools for their children. The study looked at traditional measures of K-12 education including test scores, class size and spending, as well as the number of higher education institutions in each state.
8. Business friendliness ranked states based on the perceived “business-friendliness” of their laws and regulations.
9. Access to capital focused on the availability of venture capital in the state.
10. Cost of living included housing, food and energy costs.

Based on those categories, here are the overall Top 10 for 2010:

1. Texas
2. Virginia
3. Colorado
4. North Carolina
5. Massachusetts
6. Iowa
7. South Dakota
8. Minnesota (tied with Utah for 8^th)
9. Utah
10. Georgia

CNBC says that the 2011 rankings will take states’ financial health into greater account, since state budget crises are having a major effect on business.  To find out where your state fell in 2010 and to view rankings for each of the 10 categories, see the full survey results here. And be sure to get the scoop on the 2011 rankings.

Image by Flickr user Link 576 (Creative Commons)

This entry was posted on Tuesday, May 24th, 2011 at 6:00 am and is filed under Small Business. You can follow any responses to this entry through the RSS 2.0 feed.


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