Personal finance website WalletHub has released its annual study of best and worst states to start a business in. According to their findings, Texas is the No. 1 state for startups.
To arrive at this conclusion, researchers compared the 50 states across three main dimensions: 1) Business Environment, 2) Access to Resources, and 3) Business Costs. Experts then evaluated those dimensions using 26 relevant metrics. Each metric was then scored on a 100-point scale, with higher scores indicating better conditions for startups.
“Zeroing in on some key factors, Texas was recognized for having the fourth highest average growth in small businesses and the fifth highest total spending on incentives as its percent of gross domestic product,” CultureMap Dallas reports.
Texas’ average score across all metrics was 61.05. Other top contenders include Utah, which placed second at 60.95, followed by Georgia at 58.12.
But while Texas may be ranked No. 1 for business, it is nowhere near the top when it comes to a much broader analysis of the 50 states. The Lone Star State came in at No. 38 in the U.S. News & World Report’s best states rankings for 2019, which is based on aspects such as education, healthcare, overall economy, and numerous other factors. Even so, the report still acknowledged Texas’ business climate.
“Texas’ diverse industrial base has drawn many businesses and workers in recent decades because of light regulation, low taxes, and a low cost of labor,” the U.S. News & World Report reads. “Entrepreneurs are particularly attracted to Austin, which emerged as a major player in the technology industry in the 1990s. Its ‘South by Southwest’ is one of the preeminent national tech conferences.”
According data gathered by the U.S. Bureau of Labor Statistics, approximately one fifth of all startups fail within one year of operation. Even grimmer: nearly half won’t make it past five years. According to CB Insights, bad geographical location is one of the most common reasons startups fail.