Best & worst states to start a business in 2021

COVID has changed the rules and the landscape of business

By Morf Morford

Tacoma Daily Index

From employment schedules, pay expectations, to investment possibilities, among many others, the business landscape has become a very different world than we all knew just a few short years ago.

It’s not just you.

The larger dynamics that make business work have shifted in ways few of us would have expected – or believed possible.

Some changes were years, if not decades overdue, others emerged with barely a hint of warning.

Working from home (WFH) has become the new possibility/necessity for some companies and many employees.

I know several (mostly young) workers who refuse to work any other way.

Some companies are willing to hire them under those conditions – and many are not.

Some workers are willing to work for the same pay and conditions as before – but many are not.

Workers are quitting, re-evaluating and re-calibrating their career strategies as no one would have imagined possible before.

The larger, national, even global business scenario has changed, often beyond recognition.

More and more of us, content with working for others until recently, have decided, on a scale from individual to family or more, to branch out with their vision for something only they could do.

Starting a business isn’t, and never will be, easy.

According to the U.S. Bureau of Labor Statistics, about a fifth of all startups typically don’t survive past the first year of operation.

Nearly half never make it to their fifth anniversary.

And 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.

Besides the pandemic, there are plenty of other reasons that startups falter or fail, with a “bad location” among the most common.

Choosing the right home for a business is crucial to its success.

A region, state or municipality that provides the ideal conditions for business creation — access to cash, skilled workers and affordable office space, for example — can help new ventures not only take root but also thrive.

Here’s one set of resources to help navigate your way through difficult, unforeseeable and ever-shifting times.

WalletHub compared the 50 American states across three key active and defining dimensions: 1) Business Environment, 2) Access to Resources and 3) Business Costs.

(You can see the criteria and methodology here –

A state is not a neighborhood

There’s an old saying in political circles “All politics is local”.

That premise is even more true in the business world; all business is local.

Even in the online/delivery, uber-everything economy, customers love brick and mortar shops, and they love, sometimes even more, a business with local roots and history.

A business that may thrive in one neighborhood, even within the same city, may not thrive in another.

And one state (or region) may thrive under one set of circumstances that might throttle another.

Some states, for example, have specific advantages and challenges peculiar to them.

California, for instance, is the fifth largest economy in the world, with a GDP larger than that of countries like the U.K., France and India.

Hawaii, on the other hand, is struggling with the highest unemployment rate in the country, at 9%. That makes sense considering the state has an economy that relies heavily on tourism, which took a big hit due to the COVID-19 pandemic.

As we, as individuals, as communities and as states, wend our way back to economic recovery, the pitfalls – and opportunities – are many.

And, as we all know, preparation is the best foundation for recovery.

Many state (or local) economies have been poised for recovery.

Some states cut essential services or infrastructure maintenance.

Others took this rare opportunity to invest in and consolidate with an eye on an eventual recovery.

WalletHub considered three dominating criteria (; economic activity, economic health and innovation potential.

As you might expect, there were some predictable winners (and losers).

And more than a few surprises.

Utah was number one in economic activity – and number two in economic health.

Washington state was number two in economic activity. And number four in innovation potential.

California was number three in economic activity. And number two in innovation potential.

Massachusetts was number nine in economic activity. And number one in innovation potential.

The top five states with the highest percentage of jobs in high tech, for example were;

1. Massachusetts

2. New Hampshire

3. Washington

4. New Mexico

5. California

And on a related note, innovation, as measured by the most independent inventor patents per 1,000 working age population had a five way tie between California, Connecticut, Washington, Oregon and Massachusetts.

Not all economic growth strategies are effective in facing and recovering from adversity.

Every recession and each step out of it is specific, but there are moves we can all make in a positive direction.

Like all of us, states depend on their reputation, and at a time of retrenchment, like now, states and business communities need to ask themselves some crucial questions. Here a few;

What are the most effective ways for state and local officials to help their local economies recover from the impact of the pandemic?

What can states do to prevent “brain drain” and develop, attract and retain highly skilled workers?

States and municipalities often compete for business investment by offering tax breaks and other incentives. Do such efforts more often result in a net positive or net negative impact on state economies? Do such efforts create a “race to the bottom”?

What makes a state attractive to potential entrepreneurs?

These are eternal questions drawn into a tighter focus in difficult times.

Our answers to them set the tone for the future.


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