Utah Scores Third Straight A+ In Small Business Friendliness

Small business owners gave Utah an A+ in business friendliness for the fourth year in a row, according to Thumbtack’s annual Small Business Friendliness Survey. 

Complete results for Utah are published at https://www.thumbtack.com/ut/.

Nearly 18,000 U.S. small business owners responded to the survey, including 203 in Utah. The study asked respondents to rate their state and city governments across a broad range of policy factors. Thumbtack then evaluated states and cities against one another along more than a dozen metrics.

“Small business owners on Thumbtack have consistently told us that they welcome support from their governments but are frequently frustrated by unnecessary bureaucratic obstacles,” said Jon Lieber, Chief Economist of Thumbtack. “Utah has consistently been one of the top performing states in our survey, with a business climate that manages to attract innovative tech companies like Thumbtack while still welcoming independent entrepreneurs who are starting out on their own.”

“Utah has a governor who encourages small businesses and offers support and a variety of services to help small business owners,” commented a florist in Salt Lake City. “Utah is a great state for small businesses to flourish..”

Key Findings for Utah:

  • Utah performed about the same in 2015 as it did in 2014, when it ranked #1 and earned a A+ overall.
  • Utah earned an A+ for its regulations which included licensing, tax, and labor rules.
  • Salt Lake City earned an A- and ranked #13 friendliest city for small business, just shy of the top 10.
  • Utah's worst score was a B for ease of starting a business.
  • Neighboring Colorado earned an overall friendliness score of an A and ranked #5 nationally.

Best and Worst Climates for Small Business

  States Cities
Top Ten Best-Ranked
  1. Texas
  2. New Hampshire
  3. Utah
  4. Louisiana
  5. Colorado
  6. Idaho
  7. Tennessee
  8. Virginia
  9. Georgia
  10. Kansas
  1. Manchester, NH
  2. Dallas, TX
  3. Richmond, VA
  4. Austin, TX
  5. Knoxville, TN
  6. Nashville, TN
  7. Houston, TX
  8. Fort Collins, CO
  9. Boulder, CO
  10. San Antonio, TX
Bottom Five Worst-Ranked
  1. Rhode Island
  2. Illinois
  3. Connecticut
  4. California
  5. New York
  1. Hartford, CT
  2. Albuquerque, NM
  3. Buffalo, NY
  4. New Haven, CT
  5. Providence, RI


Key Drivers of Business Friendliness

 States Cities
  1. Training Experience
  2. Tax Regulations
  3. Labor Regulations
  1. Training Experience
  2. Licensing Regulations
  3. Website Experience

Licensing was again more important than taxes – When evaluating their cities, small businesses said the ease of compliance with licensing rules mattered far more than tax rates. Tax equity – the actual rate at which business owners pay taxes – mattered far less than any measure of regulatory compliance. For example, labor rules were 88 percent more important in driving state friendliness scores when compared to tax rates.

Effective licensing was just as friendly as no licensing – Small business owners who found licensing compliance to be “very easy” were just as favorable towards their city governments as respondents who weren’t required to be licensed at all. By contrast, licensed professionals in cities with complicated requirements or inconsistent enforcement reported the lowest approval rates.

Training experience was the top factor in both state and city rankings – Offering training on developing a business and navigating the local economic and policy environment was the single biggest factor that influenced perceptions of friendliness. In cities, training was 78 percent more important than the number two factor.  On the state level, small businesses who had a positive training experience were 1.5 times more likely to rate their states as being very supportive.

High quality websites matter – Investing in a high quality, easy-to-use website that provides useful information and decreases the costs of regulatory compliance improves overall perceptions of a local or state government. Business owners who said their city had a “great” website ranked their cities 13 percent higher, while there was no difference in the rankings of business owners who were either unaware of or had had a bad experience on city websites.

Survey Methodology

Thumbtack surveyed 17,633 small businesses across the United States. The 36-question survey asked about the friendliness of states and cities toward small business, including specific questions about the regulatory environment for labor, tax, and licensing rules.

Thumbtack evaluated states and cities against one another along more than a dozen metrics. Respondents to the survey were largely very small service businesses with five or fewer employees. Every state in the country was represented, although only states with more than 50 responses and cities with more than 30 responses were given a grade.

Visit https://www.thumbtack.com/blog/2015-friendliness/ for information about survey methodology.