To identify the worst state in which to start a business, 24/7 Wall St. reviewed data from WalletHub, which ranked each state across three key dimensions: business environment, access to resources and business costs. WalletHub used 28 metrics, like average business revenue growth for the business environment, human capital availability for access to resources and office space affordability for business costs. 24/7 Wall St. added seasonally adjusted estimates for June 2021 unemployment rates from the Bureau of Labor Statistics (BLS).
The BLS puts the failure rate at 65% over the first 10 years after a start-up. The reasons for failure range from inadequate capital to poor management and poor ideas. The size of start-ups varies widely too. Some are one-person operations. Others have the backing of large venture capital firms and have millions of dollars in the bank on their first day.
The worst state to start a business in is New Jersey. Here are some details:
- Overall score: 41.07
- Best ranking feature for business: access to resources
- Unemployment rate in June 2021: 7.3% (seventh highest)
New Jersey is the 11th largest state, based on a population of 9,288,994. It is one of the slower growing. The increase in population between 2010 and 2020 was only 5.7%. The state’s economy is dominated by New York City, which is the nation’s largest metropolitan area by far with a population of 20,140,470. The metro area covers parts of New York, Connecticut, Pennsylvania and New Jersey. Interestingly enough, New York ranks 22nd on the best states to start a business, with a score of 51.30.