A study that came out in 2024 revealed that Idaho is one of the worst states to start a new business, with shockingly low survival rates.
The study, conducted by invoicing software company, Bookipi, analyzed data from the US Bureau of Labor Statistics on the number of new businesses launched in each state in 2018 and those still operating in 2023. This data was then used to calculate the five-year survival rate for new businesses in each state, highlighting the best and worst states for starting a new business.
•Missouri has the lowest five-year survival rate at 44.55%, making it the most challenging state for new businesses to thrive. Out of 17,993 businesses formed in 2018, only 8,016 survived by 2023.
•New Hampshire’s five-year survival rate is 45.99%, placing it second to last. The state saw 3,792 businesses start in 2018, with 1,744 still in operation by 2023. Employment in these businesses decreased from 11,457 to 10,938, which does not look promising for New Hampshire employers or employees.
•Ranking third lowest for small business success is Kansas, with a five-year survival rate of just 46.45%. The state had 5,457 businesses start in 2018, with 2,535 still active by 2023, placing them 5.2% below the national average.
•Nevada’s five-year survival rate is just 47.15%, placing it among the states least welcoming to new businesses. Out of the 7,672 businesses formed in 2018, merely 3,617 were still operational in 2023.
•Idaho’s five-year survival rate of 47.81% ranks it fifth lowest. The state saw 5,323 businesses start in 2018, with 2,545 still running upon review in 2023. Surprisingly, employment in these businesses increased from 17,936 to 20,855, an impressive 16.27% rise.
•In contrast, Montana has emerged as the best state in the US to start a new business, with an impressive 57.63% of new businesses launched in 2018 still operational after five years.
•Minnesota ranks second in the US for new business survival, with a five-year survival rate of 57.61%. The state saw 9,337 new businesses in 2018, with 5,379 still in operation by 2023. Employment in these businesses grew from 40,067 to 43,440, marking a substantial 8.42% increase, the seventh-highest increase across America.
*In third place is Alaska, where 57.32% of new businesses remain active after five years. Out of 1,202 businesses formed in 2018, 689 survived until 2023. However, employment decreased from 5,468 to 4,986, reflecting an 8.81% decline. This shows that Alaska is a great location for entrepreneurs but may not provide as much job security for workers.
•West Virginia ranks fourth with a five-year survival rate of 57.08%, a respectable 5.43% above the national average. The state had 2,619 businesses founded in 2018, with 1,495 of these still in operation when the study reviewed in 2023. Unfortunately for the West Virginia workforce, employment in these businesses fell from 14,456 to 13,084 during this time.
•Massachusetts holds the fifth spot with a five-year survival rate of 56.68%, which puts the state at around 5% above the national average. Out of the over 18,000 businesses launched in 2018, a respectable 10,546 survived through to 2023.
Data is according to U.S. Labor Statistics.
