7 Sizzling Spots For Startups

Opening a small business in a tough economy can be a gamble. But the odds will be more in your favor if you place your bet in a state that is friendly to entrepreneurs.

1) Arizona

According to CNN Money, Arizona is a great state to start a business. Some of the reasons include low business and property taxes, an educated labor pool (thanks to Arizona State University and the University of Arizona), and a steady migration of entrepreneurs from less friendly business states. The state also provides grants to businesses that provide in-house training for employees to upgrade their skills. Types of businesses that are hot in Arizona right now: Solar, clean, and renewable energy technology; software; and tourism.

2) Texas

The state of Texas lures 1,400 people to move there every day, and some of them come to start new businesses, according to CNN Money. Texas is popular among entrepreneurs because it is tax-friendly with no personal or corporate income tax, can provide housing and labor at a reasonable rate, and offers new businesses access to capital through a variety of public and private programs. Industries experiencing growth include health care, biotechnology, engineering, and construction.

3) California

Think California would be the last place to start a business, given its budget woes, cumbersome regulations, and sky-high unemployment? Think again. The Silicon Valley continues to be the new home for Web and biotechnology startups, and Hollywood’s strong entertainment industry inspires many new entertainment-related companies.

4) Colorado

Colorado welcomes new businesses with a relatively low cost of living, state-funded training programs, and low unemployment rates. Many technology and aerospace employees who have lost their jobs in the recession have decided to steer clear of corporate America and have opened their own information technology, manufacturing, and consulting firms. But not all the news is good: The state’s personal income and business property taxes can sometimes be a barrier to growth.

5) Alaska

alaska-trainIn a state of extremes, entrepreneurs looking to expand into “the last frontier” may run into high transportation, labor, and shipping costs in addition to freezing temperatures and long dark winters. But on the plus side, the state’s business taxes are low, there’s no state income or sales tax, and oil money provides funding for government services. Businesses popular in the “Land of the Midnight Sun” include those focused on tourism, shipping, and food.

6) Missouri

Missouri’s low taxes, inexpensive electricity, and relaxed workers’ compensation laws are luring General Motors, Ford, and Boeing to the state to open or expand factories. Other startups springing up in Missouri include companies specializing in biotechnology, life sciences, agribusiness, and food processing. One reason for the flurry of entrepreneurial activity in the state is the New Markets Tax Credit Program, which provides capital to entrepreneurs who start businesses and add jobs in low-income communities throughout Missouri.

7) Nevada

Las Vegas, Nevada, is fast becoming a destination for technology service providers, logistics companies, aerospace firms, and large retailers like the online shoe and apparel shop Zappos, which moved its headquarters to nearby Henderson, Nevada, in 2004. According to CNN Money, Nevada is a haven for small business due to no business income, estate, or franchise taxes, and extremely low income taxes. The state is simplifying the process to allow entrepreneurs to obtain a business license in just one day, and plans to launch a new online portal where business owners can collaborate, hold board meetings, and finalize contracts — all virtually.


Jan Hill is a freelance writer for Vistaprint, a top provider of customized marketing products, including business cards for freelancers and small businesses. Jan regularly writes about marketing and networking topics. Her work has appeared in various newspapers, trade magazines, and reference books.

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