Whether you're conptemplating a side hustle, bootstrapping the development of the next killer app, or already have a pocketful of funding to launch your dream business, your location matters.
Recent research by The Digital Project Manager analyzed eight indicators for how entrepreneurial a state is, including:
- Percentage of the population that starts a new business
- Percentage of start-ups still active after one year
- Number of small businesses per 100,000 people
- Growth rate of business applications
Here's what the data showed.
Entrepreneurial Index Score: 65.12
Floridians clearly have an entrepreneurial mindset that not only benefits themselves, but also their communities through the jobs that they create.
Florida has the highest percentage of the population that has started a business (0.61%). Of those, 86% started their venture out of choice rather than necessity, i.e., because they were unemployed or required another stream of income.
These start-ups have the highest number of jobs created in the first year with 6.53 new jobs per 1,000 people. With 13,238 small businesses per 100,000 people, this is the most in any state.
Entrepreneurial Index Score: 59.31
Georgia is in second place, with 10,871 small businesses per 100,000 people, demonstrating a clear entrepreneurial drive.
This is supported by the second-highest percentage of the population that has started a new business (0.47%). Georgians also have a high search interest on Google for "how to start a business."
Entrepreneurial Index Score: 58.39
Michigan is the third most entrepreneurial state. In 2022, there was 1772% growth in business applications compared to 2019. 78% of start-ups are still active after one year and there are 9,091 small businesses per 100,000 people.
The national average for business failure after five years is 49%, but Michigan is slightly below that at 47%.
Entrepreneurial Index Score: 57.58
In Oklahoma, 0.44% of the population has started a new business. Of those, 82% are still active after one year, with 9,075 small businesses per 100,000 people.
84% of those in Oklahoma who start businesses do so by choice rather than a need to.
Entrepreneurial Index Score: 57.36
In Montana there are 11,336 small businesses per 100,000 people. Within the first year, start-ups will create 6.14 new jobs per 1,000 people, and 81% of those start-ups will still be active after the year mark.
After five years, only 45% of businesses will fail, which is one of the lowest failure rates across the US.
Entrepreneurial Index Score: 57.31
Wyoming has 12,357 small businesses per 100,000 people. From 2019 to 2022 there was a 120% increase in applications for businesses.
This is also reflected in the Google searches in the state. "How to start a business" has one of the highest levels of search interest in Wyoming compared to the rest of America.
Entrepreneurial Index Score: 57.21
In Colorado 0.42% of the population have started up a new business. 81% of these start-up businesses are still active after one year, and within that year create 6.09 new jobs per 1,000 people..
Entrepreneurial Index Score: 57.04
California is the most populous state in the U.S., which provides many opportunities for people to start businesses. There are 10,792 small businesses per 100,000 people in California.
82% of start-ups will still be active after one year, creating 5.7 new jobs per 1,000 people. 0.43% of Californians have started businesses and only 44% will fail after five years, which is one of the lowest failure rates.
Entrepreneurial Index Score: 56.63
In Idaho, start-ups will create 6.11 new jobs per 1,000 people in their first year. 89% of these start-ups are created by choice and not a necessity.
Although there was a much lower business application growth rate of only 0.20% from 2019-2022, there are still 9,320 small businesses per 100,000 people.
Entrepreneurial Index Score: 56.38
Texas has the second highest population, and per 100,000 people there are 10,163 small businesses. There was a growth rate of business applications between 2019 and 2022 of 52%.
81% of new businesses will still be active after a year and will create 5.18 new jobs per 1,000 people, opening op further opportunity for residents of the state.
Nuala Turner, longtime editor of TheDigitalProjectManager.com, with deep experience covering business topics including project management software and project scheduling software, commented: “Entrepreneurship and new businesses are a driving force in economic growth and create opportunities for communities, allowing them and their people to thrive. Entrepreneurs should be encouraged to make the steps to start businesses, and this data shows the dedication and motivation that residents in the U.S. have to take the leap into being businesses owners.
This research should serve as encouragement to the budding entrepreneurs of the states mentioned above: it's worth taking the leap to turn your passion into an income.”
Method: Index created by ranking each factor out of 10 and adding the overall scores. The factors included were:
- Percent of population that starts a new business
- Entrepreneurs who started a business by choice and not a necessity
- Number of jobs created by start-ups in their first year
- Percent of startups that are still active after one year
- Search interest on Google for "how to start a business"
- Number of small businesses in each state
- Small businesses per 100,000 of the population
- Growth rate of business applications 2019-2022
- Business failure rates after five years