9.01.2015

New York earns a D for small business friendliness

B- for Training and Networking Programs

Texas, New Hampshire, and Utah top rankings in Thumbtack annual Small Business Friendliness Survey; New York and California are among the least friendly states
Small business owners said New York was not an easy location to start a business, reporting a difficult regulatory environment, despite relatively better ratings for training and networking programs and ease of hiring, according to Thumbtack’s annual Small Business Friendliness Survey. Complete results for New York will be published at https://www.thumbtack.com/ny/.
Nearly 18,000 U.S. small business owners responded to the survey, including 910 in New York. 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. “New York State could do better for these small businesses, who tell us the regulatory environment is making life too hard for solo entrepreneurs to succeed.”
“New York taxes small businesses to death,” commented a computer repair specialist in Buffalo. “The state makes the process of keeping and working with employees difficult and costly.”
Key Findings for New York:
  • New York performed slightly worse in 2015 than it did in 2014, when it ranked #32 and earned a D+ overall.
  • New York's best scores were B- grades for both training and networking programs and ease of hiring.
  • New York, NY and Syracuse both earned C- grades for overall business friendliness.
  • New York's worst score was an F for ease of starting a business.
  • Neighboring New Jersey earned an overall friendliness score of a C- and ranked #29 nationally.
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Best and Worst Climates for Small Business

 StatesCities
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. Winston-Salem, NC

Key Drivers of Business Friendliness

 StatesCities
  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.

About Thumbtack

Thumbtack is a technology-based marketplace that connects Americans with experienced local professionals to help them accomplish more than 5 million personal projects each year. More than 150,000 small business professionals actively use Thumbtack each quarter, across nearly a thousand categories including house remodeling, event planning, and music lessons. Founded in 2009 and headquartered in San Francisco, Thumbtack has raised a total of $150 million from Sequoia Capital, Tiger Global Management, Javelin Investment Partners, and Google Capital.

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