POWER RANKING: The 10 best US states for entrepreneurs to start million-dollar businesses in 2020


  • If you’re starting a small business in 2020, it helps to be in a state where the local economy is strong.
  • Business Insider evaluated all 50 states based on past growth, diversity, and economic trends to find out which are the 10 best places for small businesses to succeed.
  • We referenced data from the US Small Business Administration, in conjunction with analyses from Office Depot and MoneyPenny.
  • By our measure, Texas dominated the ranking with its high growth rate and large number of small businesses. Importantly, it was among the top 10 states for minority- and women-owned businesses.
  • Visit BI Prime for more stories.

More than 99% of all US businesses are small businesses, and they employ nearly 59 million people.

Being in a growing industry is important for your small business, but it also matters where your business is. If you’re starting a small business in 2020, it could help to be in a state where the local economy is strong.

Using data from the US Small Business Administration (SBA), in conjunction with analyses from Office Depot and the business-answering service MoneyPenny, Business Insider evaluated the 10 top states for business owners to succeed, based on past growth, diversity, and economic trends.

We ranked each state based on the growth rate in the number of small businesses from 2016 to 2018. States that showed a decline in women- and minority-owned businesses from 2014 to 2016 were filtered out. The data is from separate surveys (SBA and census, respectively) and the most recent available, which is why the time frames are not matched.

Women- and minority-owned businesses are an important indicator of the overall health of the economy and represent a significant opportunity for growth. A recent report from American Express found women were more likely than business owners to identify a need within a market and start a company to fill it.

We also referred to the SBA’s state profiles to provide a snapshot of what’s happening for small businesses in our top-ranked states.

Here are the 10 best US states where we anticipate small businesses will thrive in 2020. 

SEE ALSO: POWER RANKING: The 10 best industries in 2020 for entrepreneurs to start million-dollar businesses

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10. North Carolina

913,000 small businesses

Growth rate (2016-18): 5.5%

Top 5 industries by small-business employment:

  • healthcare and social assistance
  • accommodation and food services
  • construction
  • retail trade
  • manufacturing

North Carolina is home to the famed research triangle, where top-tier universities like Duke, the University of North Carolina, and NC State contribute to a vibrant economy.

 

9. South Carolina

418,000 small businesses

Growth rate (2016-18): 5.8%

Top 5 industries by small business employment:

  • accommodation and food services
  • healthcare and social assistance
  • retail trade
  • manufacturing
  • other services (except public administration)

South Carolina is home to major auto manufacturers and small innovation hubs, like Greenville, where startup incubators are supporting a wide array of new businesses.

8. Georgia

1.1 million small businesses

Growth rate (2016-18): 6%

Top 5 industries by small business employment:

  • accommodation and food services
  • healthcare and social assistance
  • professional, scientific, and technical services
  • retail trade
  • construction

Georgia is home to 16 Fortune 500 companies and a thriving film and entertainment industry, all of which offer a host of opportunities for small-business partnerships.

7. Oregon

378,000 small businesses

Growth rate (2016-18): 6.1%

Top 5 Industries by Small Business Employment:

  • accommodation and food services
  • healthcare and social assistance
  • retail trade
  • manufacturing
  • construction

Oregon employs the most small-business employees in the agriculture, forestry, fishing, and hunting industries. 

6. Virginia

746,000 small businesses

Growth rate (2016-18): 6.2%

Top 5 industries by small business employment:

  • professional, scientific, and technical services
  • accommodation and food services
  • healthcare and social assistance
  • construction
  • other services (except public administration)

Virginia is the only state where professional, scientific, and technical services employed the most small-business workers. These services are typically contract positions like legal advice and representation, accounting, payroll, consulting, photography, advertising, and translation. 

5. Washington

609,000 small businesses

Growth rate (2016-18): 6.4%

Top 5 industries by small business employment:

  • healthcare and social assistance
  • accommodation and rood services
  • construction
  • retail trade
  • professional, scientific, and technical services

Self-employed people in Washington earn some of the highest independent worker salaries in the nation, with average pay of $54,732 per year. 

4. California

4 million small businesses

Growth rate (2016-18): 6.5%

Top 5 industries by small business employment:

  • accommodation and food services
  • healthcare and social assistance
  • professional, scientific, and technical services
  • manufacturing
  • retail trade

California has the highest net gains in small businesses, but its growth rate was a few percentage points lower than our No. 1 pick.

3. Utah

288,000 small businesses

Growth rate (2016-18): 6.7%

Top 5 industries by small business employment:

  • accommodation and food services
  • healthcare and social assistance
  • construction
  • retail trade
  • professional, scientific, and technical services

Small businesses in Utah receive more SBA dollars lent per capita than any other US state.

2. Colorado

630,000 small businesses

Growth rate (2016-18): 6.8%

Top 5 industries by small business employment:

  • accommodation and food services
  • healthcare and social assistance
  • construction
  • professional, scientific, and technical services
  • retail trade

Over 22% of small businesses in Colorado are women-owned, the third-highest rate in the country as of 2016.

1. Texas

2.7 million small businesses

Growth rate (2016-18): 9.5%

Top 5 industries by small business employment:

  • health Care and social assistance
  • accommodation and food services
  • construction
  • professional, scientific, and technical services
  • retail trade

Texas has one of the highest net gains in small businesses and is especially strong for women- and minority-owned companies.



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