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A new report from National Business Capital has identified Colorado, Utah, and Michigan as the top three states for starting a business in 2025. The inaugural “Best States to Start a Business” report highlights these states’ combination of thriving economies, accessible capital, and business-friendly tax environments, making them ideal for aspiring entrepreneurs.
Key Findings from the Report
Top States Excel in Growth and Support
- Colorado earned the top spot with a score of 71 out of 100, thanks to its balanced blend of growth opportunities, economic strength, and support for startups.
- Utah and Michigan tied for second place, scoring 68.1. Both states offer robust economic conditions and resources for new businesses.
- Texas and Florida followed closely in fourth and fifth place, respectively, with low taxes attracting business owners, while California ranked sixth for its deep venture capital resources.
Challenges for Startups in Other Regions
- New England proved to be a challenging environment for startups due to high costs and limited support, with Massachusetts being the only state in the region to rank in the top 10.
- States like Pennsylvania, New Jersey, and New York reported strong first-year survival rates, while Minnesota and Massachusetts excelled in five-year survival rates.
- Some states, including Missouri, New Jersey, and Kentucky, saw significant drops in survival rates between the first and fifth years, with Missouri experiencing a sharp 30% decline.
Business Applications and Regional Trends
- The Mountain West and Southeast regions led in new business applications, with Wyoming, Delaware, Colorado, and Utah at the forefront.
- Conversely, New England and the northern heartland states lagged in new business applications.
Joe Camberato, CEO of National Business Capital, emphasized the importance of location in entrepreneurial success. “With a good business plan, hard work, and a little luck, you can succeed anywhere,” Camberato said. “If, for instance, my cousin wanted to open a business and she could move anywhere in the country, I would urge her to read this study carefully.”
Top 10 Best States to Start a Business in 2025
- Colorado (Score: 71.0)
- Utah (Score: 68.1) – tie
- Michigan (Score: 68.1) – tie
- Texas (Score: 66.1)
- Florida (Score: 64.3)
- California (Score: 64.2)
- Minnesota (Score: 63.0)
- Indiana (Score: 62.7)
- Massachusetts (Score: 62.1)
- Ohio (Score: 61.6)
Bottom 10 Worst States to Start a Business in 2025
- New Hampshire (Score: 45.0)
- Wisconsin (Score: 43.1)
- Maine (Score: 41.3)
- New Mexico (Score: 40.7)
- Arkansas (Score: 40.4)
- Oregon (Score: 40.2)
- Vermont (Score: 40.0)
- West Virginia (Score: 39.3)
- Rhode Island (Score: 35.7)
- Kansas (Score: 29.4)
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