{"id":40847,"date":"2025-02-11T13:01:32","date_gmt":"2025-02-11T13:01:32","guid":{"rendered":"https:\/\/swoopfunding.com\/us\/?post_type=blog&p=40847"},"modified":"2025-02-13T13:37:32","modified_gmt":"2025-02-13T13:37:32","slug":"top-states-for-startup-success","status":"publish","type":"blog","link":"https:\/\/swoopfunding.com\/us\/start-a-business\/top-states-for-startup-success\/","title":{"rendered":"The Top US States for Startup Success: Economy, Viability, Costs & Support"},"content":{"rendered":"\t\t
Across the U.S., entrepreneurship continues to boom with an average of 430,000 new business applications per month in 2024 \u2013 a 50% increase compared to 2019<\/strong>. While the ingredients to a successful business often include passion, creativity and innovation, there are various economic and environmental factors that impact long-term business prosperity.\u00a0\u00a0<\/p>\n <\/p>\n From the strongest business economies to locations that help foster work-life balance, read on as we break down which states offer the best opportunities for long-term business success in 2025.\u00a0\u00a0<\/p>\n <\/p>\n We\u2019ll explore data revealing the top locations for economic environment, business viability, operational costs and business support, all while sharing expert insights on startup success from Swoop Funding\u2019s CEO, Andrea Reynolds.\u00a0\u00a0<\/p>\n <\/p>\n In this guide you’ll find the:\u00a0\u00a0<\/p>\n <\/p>\n One of the key factors that contribute to a successful business is a positive economic environment. From the cost of living and consumer spending to ideal tax conditions, there are various benefits to gaining a foothold in a healthy economy.\u00a0\u00a0<\/span><\/p>\n We studied the top states for economic growth based on insights such as population, unemployment rate, cost of living, sales tax rates and income tax free allowance.\u00a0\u00a0<\/span><\/p>\n To see the best states overall for starting a business, discover our guide to the<\/span> top startup capitals of America<\/span><\/a>.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Leading the charge, North Dakota promises favorable economic growth with the highest income tax free allowance at $53,325 and a competitive cost of living with an index score of 94.6. Meanwhile, the state also offers a low unemployment rate of 2.4% for the population of 783,926.\u00a0\u00a0<\/span><\/p>\n According to our data, North Dakota is one of the top locations for businesses looking to lay a foundation in a thriving economic landscape, earning an overall score of 28.23. <\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Following North Dakota is Montana, offering an attractive business climate with an overall score of 24.55. Our study found that Montana offers the next-best economic conditions with zero sales tax and a reasonable income tax free allowance of $14,600.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n At 3.3%, unemployment rates are higher in Montana than in other top-ranking states in this category, although the state offers a competitive cost of living with an index score of 102.9. While higher unemployment rates may put a strain on consumer spending, it can also offer a wider pool of potential candidates for growing businesses.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Ranking third for ideal economic conditions, New Hampshire follows closely behind with a total score of 23.14.\u00a0\u00a0<\/span><\/p>\n New Hampshire has the highest cost of living score at 114. However, with zero sales tax and a low unemployment rate of 2.5% for its population of 1,402,054, the Granite State still offers a steady landscape for budding businesses to grow. <\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t A word from Andrea<\/p>\n \u201cNorth Dakota is romping home with that tax-free allowance \u2013 you can see why any entrepreneur would want to live in a state that allows them a pretty healthy income before they start paying any income tax at all. Montana\u2019s slightly higher unemployment rate should make it easier to find workers, and as the cost of living is middling, staff costs shouldn\u2019t break the bank.\u00a0New Hampshire enjoys a legacy of prosperity, innovation and access to the economic powerhouse of New York. New Hampshire is a state with plenty of local, well-off potential customers and investors close at hand.\u201d<\/em><\/p> <\/div>\n <\/div>\n<\/div>\n\n\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t For a startup to be successful, your business has to be viable for long-term survival by remaining profitable as time goes on. When it comes to potential business growth, various environmental factors can help encourage new businesses to thrive in a competitive environment.\u00a0<\/span><\/p>\n Discover our top states for business viability below as we consider factors such as venture capital (VC) investments, business survival rate, and entrepreneurial activity.\u00a0 <\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Famous for technological innovation and its keen entrepreneurial spirit, California leads for business viability in 2025.\u00a0\u00a0<\/span><\/p>\n The Golden State offers many competitive advantages for startups and new businesses, boasting an impressive $81.57 billion in venture capital (VC) investments. A certified economic powerhouse, its biggest and fastest-growing sectors include technology, agriculture and healthcare. And despite attracting the second-highest number of entrepreneurs at 45,025, California promises the strongest business survival rate at 54.6%.\u00a0\u00a0<\/span><\/p>\n All combined, these factors earn California an overall score of 24.65 \u2013 indicating a positive entrepreneurial culture in which startups can benefit from strong investor confidence and potential business growth.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Texas is a promising base for business viability, claiming second place with an overall score of 14.67.\u00a0\u00a0<\/span><\/p>\n \u00a0<\/span>Attracting $6.66 billion in VC investments, Texas offers entrepreneurs strong long-term business growth. Only narrowly behind California, Texas also boasts an encouraging business survival rate of 53%, with over half of businesses surviving the five-year milestone.\u00a0\u00a0<\/span><\/p>\n \u00a0<\/span>And with more than 40,900 entrepreneurs in various sectors across the market, the Lone Star State shows a healthy entrepreneurial culture for startups to engage in.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Though lacking in VC investments at $2.96 billion, Florida invites new businesses to step into a prosperous business landscape with a total score of 14.38. Florida offers the largest entrepreneurial community in the U.S. with more than 50,300 entrepreneurs and a competitive business survival rate of 50%.\u00a0\u00a0<\/span><\/p>\n Whether you\u2019re just launching your business venture or expanding your offering, learn more about how Swoop Funding can support startups and sole traders with<\/span> small business loans<\/span><\/a> and<\/span> working capital loans<\/span><\/a>.\u00a0\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t A word from Andrea<\/p>\n \u201cTechnology is the big story for business viability and there are no surprises that the top spot is taken by California, home to Silicon Valley and keen-eyed investors. Successful businesses solve a problem and in both Texas and Florida, there are plenty of customers willing to pay for a solution. Texas nearly matches California for the number of dollars being invested in new businesses while in Florida, there are opportunities for any product or service that meets the needs of retirees, tourists or the other businesses that serve them.\u201d<\/span>\u00a0<\/em><\/p> <\/div>\n <\/div>\n<\/div>\n\n\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t From the cost of office rent to<\/span> equipment financing<\/span><\/a> and employee benefits, the operational costs of running a business can all add to the challenges and responsibilities of a successful business venture.\u00a0\u00a0<\/span><\/p>\n We analyzed key factors that can impact operational costs and business profitability to uncover the most affordable states in 2025, including hourly wages, annual employer health insurance contributions and average office rent.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Mississippi wins the title of the most affordable state for running a business in 2025. According to our data, the state earns an overall score of 26.59, thanks to competitive hourly wages (\u00a327.03) and affordable annual health insurance contributions per employee ($5,610).\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n Meanwhile, Mississippi offers lower office rent than the majority of the U.S. \u2013 with the second most affordable average at 17.68 square feet per annum.\u00a0\u00a0<\/span><\/p>\n All factors considered, this makes Mississippi a compelling location for businesses to optimize operational costs and boost profitability.\u00a0\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t In second place, Tennessee offers low monthly office rent and agreeable wages, earning a score of 23.97.\u00a0\u00a0<\/span><\/p>\n In fact, Tennessee offers the highest wages at an average of $30 per hour, as well as the highest average employer health insurance contributions per employee at $5,833. Businesses in Tennessee compensate for these costs with the lowest average office rent in the country at 16.53 square feet per annum.\u00a0\u00a0<\/span><\/p>\n It\u2019s true that higher wages and health insurance premiums can increase labor costs and potentially impact profit margins. However, greater investment in employee salary and health insurance benefits may help to improve employee retention and satisfaction, which can positively influence productivity. <\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Close behind Tennessee with an overall score of 23.31, Arkansas rounds out the top three most affordable states for running a business in 2025.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n Compared to Mississippi and Tennessee, Arkansas is the most expensive state for the average cost of office rent at 22.63 square feet per annum.\u00a0\u00a0<\/span><\/p>\n However, with competitive hourly wages ($28.84) and generous employer health insurance contributions ($5,825), Arkansas promises a reasonably cost-effective climate for businesses that prioritize profitability and employee benefits.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t A word from Andrea<\/p>\n \u201cBusinesses live or die by their cash flow. When running costs are low, it\u2019s easier for a business to stay viable and survive set ba<\/span>cks. A low cost of office space and prioritizing employee wages and benefits mean that businesses in these states are not only great places for startups, but also have the potential to attract workers to relocate from other states.<\/span>\u00a0\u201d<\/span>\u00a0<\/em><\/p> <\/div>\n <\/div>\n<\/div>\n\n\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t According to the<\/span> 2024 State of Hybrid Work Report by Owl Labs<\/span><\/a>, 27% of workers are currently working in a hybrid model, while 11% are completely remote.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n Nine in 10 (90%)<\/span><\/a> of hybrid workers report that they are more, or just as productive, when allowed to work in a hybrid format. Meanwhile, the Stanford Report claims that hybrid work can benefit both companies and employees,<\/span> positively impacting employee satisfaction and turnover<\/span><\/a>.\u00a0<\/span><\/p>\n As businesses continue to embrace flexible work models for employees, it\u2019s clear that the demand for hybrid working is here to stay. Read on to discover the leading states that foster business support and co-working spaces below.\u00a0\u00a0<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Sitting at the top spot for its positive hybrid working culture, Texas earns a high score of 9.09. Texas offers a healthy 280 co-working spaces to its 30 million residents, embracing the added work-life balance while nurturing co-worker interaction and collaboration. <\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t Following closely behind Texas, Florida earns second place with an overall score of 9.06. With 279 co-working spaces, the Sunshine State could be an attractive destination for businesses that recognize the advantages of remote and hybrid work models.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t It\u2019s no surprise that tech-driven California embraces the modern flexibility of hybrid and remote working models, earning the state a total score of 8.75. Always on the cutting edge, California ranks third for the most co-working spaces in the U.S., offering 270 spaces for its 38.9 million residents.<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t A word from Andrea<\/p>\n \u201cHybrid working is really just using technology to make the process of turning up for work more efficient. With remote and hybrid working becoming more normal and expected by younger employees, business environments that support the flexibility will find they have greater choice of who wants to work there. It\u2019s no surprise that expensive states for office space are welcoming workers who don\u2019t take up valuable real estate or spend hours commuting.\u201d<\/span>\u00a0<\/em><\/p> <\/div>\n <\/div>\n<\/div>\n\n\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t This dataset ranks all 50 US states, based on how good they are for start-up businesses. To do this, 11 different factors were used. Once the data for the factors was collected, the factors were then normalized, to provide each factor with a score between 0 and 1. If data was not available, a score of 0 was given. The normalized values were then summed & multiplied by 9.09, to give each state a total score out of 100. The states were then ranked from highest to lowest, based on their total scores.\u202f<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t The factors used are as follows:\u202f\u202f<\/span><\/p>\n\n
\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\tBest States for Economic Environment<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
1. North Dakota<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
2. Montana<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
3. New Hampshire<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n
Swoop\u2019s CEO & Co-Founder<\/div>\n <\/div>\n Best States for Business Viability<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
1. California<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
2. Texas<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
3. Florida<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n
Swoop\u2019s CEO & Co-Founder<\/div>\n <\/div>\n Best States for Operational Costs<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
1. Mississippi<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
2. Tennessee<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
3. Arkansas<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n
Swoop\u2019s CEO & Co-Founder<\/div>\n <\/div>\n Best States for Business Support<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
1. Texas<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
2. Florida<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
3. California<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
\n
Swoop\u2019s CEO & Co-Founder<\/div>\n <\/div>\n Methodology<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t