Location is a factor we often don’t discuss with regard to entrepreneurism. This is because most small business founders simply start where they already live, unless the nature of the business demands a specific place.
This makes perfect sense, but at the same time location is probably more important than we give it credit for. If you look back at the ‘15 Major Questions an Entrepreneur Must Answer to Succeed in Business’ discussed here previously, in fact, you’ll notice that a number of key points have to do with where a business is based.
Considering social and economic network; identifying target customers; sales and distribution channels; compliance with local regulations and laws…. All of these factors can be different depending on where a business is based.
Ultimately, the optimal location for a business will depend on its founder’s priorities, as well as the industry the business is part of, and the market it’s looking to serve. To speak to the idea of a location more generally though, we decided to look at three states that can be said to be particularly favorable to startups.
1. Texas
Beginning with Texas may surprise some readers, but the truth is that this state has been rising up the startup ranks for a number of years now. For starters, Texas has no state income tax, a diverse population, and several thriving cities of varying sizes and cultural makeups.
All of this — before we even get to specific business considerations — makes for an environment that attracts a lot of businesses, entrepreneurs, and young people. The foundation is naturally in place for a booming startup community.
Beyond those general conditions though, there are also a number of reasons that Texas appears to have become particularly attractive to startup founders. The appeal of Texas is that the state has a deep talent pool for new businesses to recruit from; there are tax benefits for businesses, in addition to the aforementioned lack of personal income tax; there’s a culture of embracing innovation, and the state is consistently graded well for general friendliness to small businesses. In short, Texas really checks all of the boxes one would hope to check when seeking a place to start a business.
2. Oklahoma
Oklahoma is a state most people wouldn’t think of when considering startup culture. But it’s one that’s become significantly more prominent in this regard just in the last few years.
Recently, Oklahoma City has begun to feature on lists of the best businesses for entrepreneurs and new startups. And a TechCrunch write-up on Tulsa earlier this year spoke to a budding startup culture there as well (citing favorable living arrangements and costs, incentives for workers to move to town, and the appeal of the city itself). Together, these cities are putting Oklahoma on the map as a budding hotspot for new companies.
As to what exactly is driving interest in these cities, a few things come to mind. One is the relative ease with which incoming entrepreneurs can set up their businesses. In regards to how to form an LLC in Oklahoma, it only takes a few steps to complete the process in the state before a business becomes official — whereas some other states have a bit more red tape to get through.
Additionally, Oklahoma offers some incentives to workers, as mentioned with regard to Tulsa. That city specifically offers $10,000 to remote workers who will relocate there to help build a more vibrant economy. Factors like these — coupled with a budding tech culture and the snowball effect of bigger cities starting to gain recognition for startup success — are helping to make Oklahoma one of the leading states for new businesses.
3. Washington, D.C.
Okay, so Washington, D.C. isn’t a state (though a Vox discussion on statehood makes a fairly strong case for the idea, and it could be one in the future). It’s nevertheless recognized in many respects as an independent entity within the U.S. And if we were to think of it as a state, we’d have to include it as one of the very best ones in which to start a new business.
There are a lot of reasons for this. For one thing, tech investment has been booming in the district for years now. For another, the district consistently attracts young professionals, to the point that it has a disproportionately young population compared to many other major states and cities.
Additionally, Washington, D.C. has various incentive programs aimed at spawning the formation and growth of new businesses, such as the DC Main Streets Program. And even looking past all of this, there’s something to be said for what the district really is. While this is a more intangible benefit, it can’t be annoyed that D.C. is a general hub of activity and excitement, full of serious, ambitious, and energetic people. This can make for a very good environment for startups.
There are still plenty more places across the U.S. that make for excellent locations for new businesses. And again, some aspects of this discussion may depend on the nature of a given business or entrepreneur. But if you’re looking for some objectively strong options, the three above are excellent to start with.