America’s Most Entrepreneurial States

During a year when almost the entire country was limited to conducting regular business from a home office, back bedroom or even a virtual office, you’d assume no one was in much of a mood to shake things up even further. Not least by starting a brand new business.

But it takes more than a pandemic to dampen the country’s creative spirit. In fact, it stokes that entrepreneurial fire in our bellies. 

Across the US, in the face of adversity, people have found new ways to make a living off their ingenuity through all kinds of services, from deliveries to online tutoring, accounting, wellness programs and much more.

Not only has the US population lived up to its global reputation for independence, financial self-reliance, and ambition, but for business innovation too. Particularly during the last year, this is proof of their resilience in deeply affecting times, both personally and economically. 

It’s these qualities that shape the American value system and will have a positive impact economically, as new businesses are essential for creating jobs and encouraging financial growth across the country.

One thing is for sure, the entrepreneurial state of mind is alive and well all over America, but what state is home to the most independent businesspeople? 

Finding the most entrepreneurial state in the US

We looked at data from all 50 states to determine which one could be crowned home to the most entrepreneurial citizens in the US. 

Firstly, using Google Trends data, we looked at which state searched for the term ‘How to start a business’ the most. This helped us to determine where the intention to start a business is strongest.

To reveal whether a population’s business ideals matched their drive, we cross-referenced these findings with an official data report from the US Census. This provided five years’ worth of regional business launch data to help us see which states actually created the most businesses.

Our league table reveals the most entrepreneurial states according to this data, crowning a winner and forecasting where, potentially, the next up-and-coming entrepreneurial hub might be.

Source: Google Trends

The results

The state with the most companies formed in the last year (Q4 2019 to Q3 2020) was Florida, with nearly half a million new businesses formed (472,332). 

California followed in second place with 365,207 businesses formed, and Texas came in a close third, with 365,107. When looking at this data, however, it’s worth bearing in mind that these are the states with the highest overall populations.

But while Florida, Texas and California have historically topped the list of most attractive states for ambitious business entrepreneurs, our data revealed a surprising overall winner.

The true champion, and winner of the title Most Entrepreneurial State, is Wyoming. Wyoming had the highest number of new businesses per capita, with one business formed for every 26 people. In fact, over the last five years, Wyoming has seen one business formed for every six people.

By comparison, West Virginia had the lowest number of businesses formed per capita, with one business created per every 173 people.

Interestingly, Mississippi saw the biggest year-on-year rise in the number of businesses formed, with nearly 52% more businesses created from Q4 2019 to Q3 2020 than in the previous year. This is followed by Georgia (47%) and Louisiana (44%), where the growth in business innovation is following a promising upward trend.

In terms of Google Trends, Mississippi was also the state with the most people searching for “How to start a business” over the last year, though Wyoming saw the biggest increase in searches for this term.

Looking back over the last five years, Georgia saw more searches for this term than any other US state. Taking second place for the largest year-on-year increase in businesses created, it seems the people of Georgia aren’t just blue-sky thinking, they’re also turning these dreams into a reality.

On the flip side, North Dakota saw the biggest fall in the number of new businesses, with nearly 10% fewer than the previous period

The number of new businesses also fell in South Dakota, Vermont, New Hampshire, Rhode Island and Idaho. This was reflected in the Google Trends data, which saw Vermont, North Dakota, New Hampshire coming bottom of the list.

Why is the picture so different across the US?

With a population of over 328 million spanning 9.8 million square kilometers, it’s only natural that we find some states offer a more encouraging environment for businesses than others.

Factors that differ greatly between each of the US states include the financial climate, the cost of living, investment potential, workforce availability, tax liability, funding opportunities and other business-centric legislation. These all contribute to a state’s attractiveness to new entrepreneurs. However, there are times when people rise above national expectations and opportunities.

Just a year ago, the Best States Rankings for 2019 from The US & World News Report put Wyoming as low as 42nd place for its economy - which grades business environment, growth and employment in equal measure (33% / 33% / 33%) - and in 31st place overall.

But after one of the toughest years economically, our results paint a different picture of this state. With the highest ratio of new businesses to people, Wyoming has proven conclusively that its start-up spirit is alive and well, making it Rovva’s most entrepreneurial state in America.

Methodology

The data on new businesses in US states was taken from the US Census's quarterly Business Formation Statistics. The 'last year' was aggregated from the Q4 2019 to Q3 2020 statistics, compared to the previous year from the Q4 2018 to Q3 2019 statistics.

Google Trends scores are based on the number of Google searches for "How to start a business" in each state from 22/12/2019 - 22/12/2020, compared to the previous year.

Now that you know all about America's most entrepreneurial states, check out our guide to the cheapest countries in the world to start your business

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Your complete business toolkit

Rovva puts everything you need for your business in one place. From an accountancy helpline to a drop-in business lounge - we've got everything covered.