Washington, DC – October 3, 2024 By Paolo von Schirach, President, Global Policy Institute; Professor of Political Science and International Relations at Bay Atlantic University, both in Washington, DC. The still accepted narrative, is that in America most, if not all, dreams come true. With an open road in front of them, would-be entrepreneurs are free to pursue their original ideas. Soon enough these ideas find concrete form in a “start-up.” In no time the start-ups become viable, super successful commercial enterprises. Then inevitably the successful Initial Public Offering, IPO, come. As a result, the founders and key shareholders become billionaires. This is not the real picture. Many new companies are formed. But most of them fail. And very, very few become extremely successful.
That said, it is true that it is usually easier to set a new company in the U.S. than almost anywhere in the European Union. It is also true that in America there is still a powerful “can do” spirit that motivates people to face huge challenges, including the very real risk of failure, and possibly financial ruin.
Perhaps for these reasons many ambitious foreigners are driven to come to America. (Think of Elon Musk, Tesla’s founder, once a young immigrant from South Africa, now the wealthiest person in the world.) These foreigners are attracted to a good business climate that includes an enterprise friendly “ecosystem,” with few bureaucratic and regulatory obstacles. At the same, in the U.S. there are several, well-established Venture Capital firms actively seeking candidates for funding injections among new start-ups. That said, it is not really true that the go-to places for would-be entrepreneurs must be Silicon Valley, in California, or Austin in Texas.
Indeed, reading a special feature in Forbes, a highly respected business publication, titled Ranked: The Best States To Start a Business In 2024, (January 2, 2024), we discover that these household names are not necessarily the best U.S. states to set up a new business. To rank states based on the easiness to set up a new business Forbes “took into consideration factors that impact businesses and their ability to succeed, such as business costs, business climate, economy, workforce and financial accessibility in each state.”
And here are the surprising Forbes findings: the state of North Dakota is number one in America when it comes to easiness of starting a new business! North Dakota? How is this possible?
According to the article:
- “Overall best state to start a business: North Dakota ranks as the top choice for launching a business in 2024. Its strong business climate, low cost of entry and funding opportunities make it an optimal location for new ventures.”
- “Overall worst state to start a business: Vermont is at the bottom for starting a business. Factors such as startup costs, business climate and potential obstacles for startups mark it as a less favorable option.”
- “Best and worst states by business survival rates: California leads with a high business survival rate of 81.5%, reflecting a thriving business environment. Conversely, Washington struggles with the lowest survival rate at 59.2%.”
- “States with the highest and lowest cost to register a business: Kentucky is the most budget-friendly state for business registration, charging only $40. In contrast, Massachusetts requires the highest fee of $500, posing a significant initial cost for startups.”
- “States with the most promising workforce: Massachusetts is notable for its educated workforce, with 46.65% holding a degree. Colorado and Vermont also excel in this area. Colorado additionally has the largest proportion of working-age population at 67.4%, closely followed by Massachusetts and California at 66.4%.”
How did North Dakota come on top? Well, if we dig a bit deeper, may be this finding is not so strange. It is true that North Dakota used to be a sparsely populated (around 700,000 inhabitants) agriculture state. Mostly famous for its horribly cold winters.
But then came hydraulic fracturing, and the consequent shale oil boom. From practically zero, the state of North Dakota rapidly became the third largest oil producer in America. Oil brough in drillers, oil services companies, pipeline builders, logistics services providers, and thousands of new workers. That said, it is important to note that the almost overnight oil boom did not create chaotic, unmanageable growth.
The state has excellent services, including top of the line health care, a business-friendly public administration, and a highly rated public education system. These good pro-business foundations led other non-oil industries such as Microsoft, Northrop Grumman, John Deere, and Bobcat to expand their operations in the state. Earth moving equipment giant Caterpillar decided to set up a remanufacturing plant in North Dakota instead of South Korea. In North Dakota, most new businesses (77%) survive. This is a very high percentage, considering that so many promising start-ups do not make it.
After North Dakota Forbes ranks Indiana and Arkansas, states not generally well known as preferred breeding grounds for successful new enterprises. And here is the beauty of America. Nothing stays the same. Centers of gravity shift. A combination of a business-friendly environment, low taxes, a highly educated forces, and good infrastructures draw would-be entrepreneurs to new localities.
Way before the impressive rate of growth in states that used to be backwaters begins to generate media attention and headlines, the new entrepreneurs have been busy creating companies, employment, new wealth, and economic growth.
About Global Policy Institute
The Global Policy Institute (GPI) is an independent, non-partisan research institution headquartered in Washington, D.C. focusing on global affairs, economics, energy and education. GPI works closely with Bay Atlantic University (BAU). Through its international network of affiliated scholars, GPI conducts research and analysis, develops realistic policy solutions, organizes events and endeavors to unite political and business leaders in an ongoing effort aimed at addressing global issues in a constructive way.
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Washington, D.C. 20005 United States
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