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15 Worst States in America To Start A New Business

SimiJanuary 30, 2018

5. Maine

This state has the 9th smallest population and is the northernmost point in the New England region. It has a rocky coastline and has a heavily forested region in its interior parts. The territory which is now known as main was inhabited by indigenous people for thousands of years. In 1604, the area saw its first European settlers. These came from France and they settled in Saint Croix island.

The harsh geographical climate along with various skirmishes with the indigenous inhabitants meant that many of the later British colonies did not survive long. By the time the 18th century rolled along, only a few European settlements were left. Maine only became a separate state in 1820, when it left Massachusetts.

In 2007, Maine had a rather low personal income-per-capita and only ranked in at number 34. Its agricultural exports are varied and quite large in parts. These outputs are cattle, maple syrup, maple sugar, apples, dairy products, eggs, poultry, and blueberries. In 2012 Maine was named by the USDA as the largest blueberry producing state. These blueberries are primarily low-bush berries and amounted to 91 100 000 pounds. There is also a steady commercial fishing industry in Maine, but it is outdoor recreation and tourism which is proving to be increasingly more prominent.

There is a substantially large amount of small businesses in Maine. They employ 57.5% of the population, but these numbers do not necessarily guarantee the survival of small businesses. The cost of living and the current tax climate that businesses are facing, put Maine at number 46 on the small business survival index. These conditions have been improving since 2016 but the state is still largely an unfriendly place for new small businesses.

4. West Virginia

West Virginia became a state in 1861 and was the sole state which formed by separating themselves from a pre-existing confederate state. This Southern state is known for its hills and mountains and boasts a host of outdoor activities. These include fishing, hiking, backpacking, rock climbing, hunting and many more. This is the only state which is completely inside the area known as the Appalachia and is a hot spot for scientific research and recreational caving.

In 2010 tourism was the biggest industry in the state and thus contributed the most to its economy. In this same year tourism and its related businesses employed 44 400 people and made $4.27 billion. Most of this business is due to the states outdoor opportunities. Adventurers go rock climbing in Seneca Rocks, enjoy winter sports in the Canaan Valley, white-water raft in the New River Gorge and hike in the Monongahela National Forest.

The largest resource in this state is coal. Its electricity is produced solely on this product and West Virginia even produces a surplus of energy each year. There is also a fair amount of farming that is practiced here but due to the mountainous landscape, it is quite sporadic.

This 41st biggest state in America may be the spot for an idyllic vacation, but it is not an ideal place to start a business. It is ranked number 36 on the small business survival index and has the worst start-up rate in the country. The cost of living may be quite low here and it does have an educated workforce, but its current per-capita GDP is still rather sluggish at $36,315. It does have a good opportunity share for new entrepreneurs, but one should think twice before investing all their money here.

3. New York

Unsurprisingly, the state of New York boasts one of the highest GDPs in the United States. This value sits at $64,579 and is obviously thanks to the ever-burgeoning New York City. This internationally recognized city is not only the most populated city in the state, but it is also the most populated city in the entire United States. About 60% of the state’s population resides in the municipality of New York while a further 40% in Long Island. The Duke of York gave both the city and state its name in the 17th century. New York may not be the state capital, that is Albany, but that has not stopped it from making its name known globally and in every possible circle.

New York City has been known as the capital of finance, culture, and media. It is also the base for the headquarters of the United Nations. Furthermore, the economy of the state of New York is so sizable and profitable that it can even rank among entire countries.

In 2015 the GSP (Gross State Product) of the state of New York came in at a whopping $1.44 trillion. Going on these values, if it were to be ranked as an independent nation it would land up being either the 12th or 13th biggest economy in the world.

One would think that these numbers would make New York a good place to start a business. While there is a high density of start-ups, it is not a favorable location for small businesses. The state has one of the harshest tax climates in the country, which few small businesses would be able to withstand.  This state may be ideal for huge corporations and investors, but it is not welcoming to small-scale entrepreneurs.

2. California

This Pacific Region state is home to 39.5 million people. It is the 3rd largest state in America and has the biggest population. This enormous population is spread across the vast state in cities such as Los Angeles, San Francisco and the capital, Sacramento.

The San Francisco Bay Area and Greater Los Angeles Area may slightly trail behind the New York Metropolitan Area in terms of urban economies, but the state of California hosts the largest economy in the country. If it were to be ranked as an independent nation its population would come in at number 36 while its economy would be the 5th largest in the world. This ranking would be made on the fact that the economy of California comes in at $2.717 trillion.

This state has long held the title of trendsetter. It is the home of the film industry, the internet, the personal computer and the hippie counterculture, to name but a few. The economy of California is so large and so diverse that while its agricultural industry only contributes 1.5% to the state’s economy, it is still the highest output in the country. Finance, real estate, technology, government and other business services make up 58% of the economy in this state.

While California alone contributes 13.9% to Americas Gross Domestic Product, it also sports an incredibly tough environment for small businesses. The start-up density may be incredibly high and there are a startling number of new entrepreneurs in this state, but this does not necessarily translate to small businesses. The cost of living is extraordinarily high, and the tax structure is the third worst in the entire country. These conditions mean that the start-up and running costs of a small business are generally so high, that starting said businesses are actually not viable.

1. New Jersey

Despite New Jersey being the 4th smallest state in America, its population of 9 million people makes it the 11th most populated state. This combination of small size along with a large population squarely makes New Jersey the most densely populated state in the United States. Statistically, this small state fully lies within the areas of Philadelphia and New York City. When considering the median income of each household, the Garden State was the 3rd richest in the country.

New Jersey had Native American inhabitants over 2 800 years ago and it was only in the 17th century when the first European settlers arrived. These were of Dutch and Swedish origin. While the region may have changed hands in the following years, by the time the American Revolution arrived it landed up hosting some very decisive battles in the 18th century.  New Jersey was not only influential during times of war, it was also a large contributor to the Industrial Revolution.

This state was home to ‘’The Big Six” in the 19th century. These cities were Elizabeth, Jersey City, Paterson, Camden, Trenton and Newark with each having factories. In the last part of the 20th century a process known as suburbanisation aided in the growth of the state’s economy. This process did not continue indefinitely and towns which utilized auto-mobiles over railways tended to marginally fall behind.

The rate of new entrepreneurs is among the highest in the country and sits at 0.34%. With the majority of these businesses being started out of sheer opportunity. The per-capita GDP of New Jersey is $57,084, which is sufficiently high to possibly make it attractive to prospective business founders. This would be the case if the tax climate was not so unwelcoming to small businesses. On the business tax climate index, New Jersey ranks last, with the major contributor being very high property taxes.