According to SBEC chief economist Raymond J. Keating, author of the study, "What the Small Business Survival Index seeks to expose is whether state and local governments turn out to be a plus or a minus when it comes to entrepreneurial decision-making. Specifically, just how weighty are the costs that elected officials impose on entrepreneurs, small businesses, and their employees state by state?"

Karen Kerrigan, SBEC CEO and president, added, "Most elected officials talk about how much they love small business. Some follow through in their actions, but others impose policies that are harmful to small business and entrepreneurship."

The index analyzes 23 government-related costs affecting small businesses, including an assortment of taxes and measures that reflect various regulatory costs, and computes an overall rating.

Keating noted, "The Small Business Survival Index provides a measure by which states can be compared according to how the state and local governments treat small business and entrepreneurs. In essence, it is a comparative measure of economic incentives relating to government policies."

According to the index, the states that are most small business friendly are: (1) South Dakota, (2) Nevada, (3) Wyoming, (4) Washington, (5) Florida, (6) Michigan, (7) Mississippi, (8) Alabama, (9) Colorado, (10) Indiana, (11) Texas, (12) Pennsylvania, (13) South Carolina, (14) New Hampshire, and (15) Virginia. In contrast, the states that are least small business friendly are: (37) North Carolina, (38) Montana, (39) Oregon, (40) Ohio, (41) Massachusetts, (42) Vermont, (43) Iowa, (44) New Jersey, (45) New York, (46) Maine, (47) Minnesota, (48) Rhode Island, (49) Hawaii, (50) California, and (51) District of Columbia.

Keating also stated, "How the states rank on the Small Business Survival Index has a real affect on the economy. For example, population growth has been much faster overall in states ranking in the top half on the index, compared to those in the bottom half. In fact, from 1995 to 2002, more than 2.5 million people net moved from the 25 states and District of Columbia that rank in the bottom half to those 25 in the top half. Job growth also was faster among the top 25 states. Finally, looking at average annual growth in personal income from 1993 to 2003, of the top 10 fastest growing states, eight fell into the top half on the Survival Index, while of the 10 slowest states, seven ranked in the bottom half of the index."

For a copy of the Small Business Survival Index 2004, visit SBEC's Web site at www.sbecouncil.org.

Publication date: 10/25/2004