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The Top 5 States for Small Business Start-Ups and Government Contracting


The Top 5 States for Small Business Start-Ups and Government Contracting

Over the last few years, small businesses have been on top when it comes to winning government contracts. In the United States, government agencies are obligated to award 23% of contracts to small businesses but that goal has not always been met. In recent years, however, most government agencies have not only reached this goal but surpassed it: In 2014, government awarded 25 percent of all contracts to small businesses, totaling about $91.7 billion in spending.[i] These contracting achievements encourage small businesses to engage in competitive government bidding, and also provide an incentive for entrepreneurs to start more small businesses.

When we look at government contracting data by state, it becomes clear that some states provide more opportunities than others for small business owners to start companies and get involved in government bidding. The top five states ranked according to how “Business Friendly” they are for small businesses are Texas, New Hampshire, Utah, Louisiana, and Colorado. The least “Business Friendly” states are: Rhode Island, Illinois, Connecticut, California and New York. [ii]

Below is some interesting information about the top five “Business Friendly” states gathered from the Small Business Association (SBA).

Texas

Texas is home to an estimated 2,366,053 small businesses, according to the SBA. The small business workforce in Texas employs about half of the state’s private workforce; in 2011, that translated to around 4.1 million employees. Of the 2.36 million small businesses, 1,195,000 are male-owned; 669,000 are women-owned; 792,000 are minority-owned and 218,000 are Veteran-owned. In Texas, most small businesses are owned and operated by sole proprietors, and generated a total income of $172.4 billion in 2013.

In 2012, Texas’ economy grew at a faster rate than that of the entire United States. The top five industries with the highest number of small businesses in Texas are Professional, Scientific and Tech Services (304,376 businesses), Construction (290,815 businesses), Administrative Support, Waste Management and Remedial Services (233,400 businesses), Retail Trade (208,179 businesses), and Health Care and Social Assistance (199,870 businesses).

New Hampshire

New Hampshire has an estimated 132,044 small businesses. Like in Texas, small businesses in New Hampshire account for about half of the states private workforce, about 282,664 employees. The total income generated by sole proprietors in 2013 was $6 billion. Of the small businesses in New Hampshire, 73,000 are male-owned; 34,000 are women-owned; 5,000 are minority-owned and 13,000 are Veteran-owned. The top five industries in New Hampshire with the highest number of small businesses are Construction (21,278), Professional, Scientific and Tech Services (20,458), Real Estate, Rental & Leasing (12,659), Retail Trade (12,404) and Administrative, Support, Waste Management and Remedial Services (9,151).

Utah

Utah is home to an estimated 252,186 small businesses, accounting for 486,325 of Utah’s 2011 private workforce - around half of the state. In 2012 Utah’s economy grew at a faster rate than that of the U.S. and generated real gross state product growth of 3.4 percent (compared to U.S. gross domestic product growth of 2.5 percent during the same period). In 2013, sole proprietors (who operate most of the state’s small businesses) took in a total of $8.7 billion. Of the 252,186 small businesses in Utah, 124,000 are male-owned; 63,000 are women-owned; 17,000 are minority-owned and 18,000 are Veteran-owned. The top five industries with the highest number of small businesses are Professional, Scientific and Tech Services (39,149), Real Estate, Rental & Leasing (32,941), Construction (25,479), Retail Trade (25,468) and Health Care and Social Assistance (18,840).

Louisiana

In Louisiana there are an estimated 414,779 small businesses according to the SBA. In 2011 more than half of the state’s private workforce was employed by small businesses, counting about 875,974 employees. Of the 414,779 small businesses in Louisiana, 210,000 are male-owned; 114,000 are women-owned; 92,000 are minority-owned and 43,000 are Veteran-owned. The total income in 2013 for sole proprietorships reached $20.1 billion. The top five industries with the highest number of small businesses are Construction (46,172), Professional, Scientific and Tech Services (46,110), Administrative Support, Waste Management and Remedial Services (40,522), Health Care and Social Assistance (39,770) and Retail Trade (33,627).

Colorado

In Colorado there are an estimated 556,586 small businesses, which employ about half of the states private workforce (962,232 employees). Of these small businesses, around 270,000 are male-owned; 163,000 are women-owned; 61,000 are minority-owned and 50,000 are Veteran-owned. The total income for sole proprietors in Colorado reached $25 billion in 2013. The top five industries with the highest number of small businesses are Professional, Scientific and Tech Services (98,663), Construction (65,074), Real Estate, Rental & Leasing (62,665), Retail Trade (46,678) and Health Care and Social Assistance (44,312).

(*Source: 2013 Small Business Profiles for State and Territories. 2014. Sba.gov. 16 Dec. 2015)

 

While the states listed above are considered to be the most hassle-free states in which to start a small business, they are not the top states when measured by highest number of small businesses and annual income generated.

Top Five States with the Highest Number of Small Businesses

State

# of Small Businesses

Annual Income (2013)

California

3,571,013

$149.4 billion

Texas

2,366,053

$172.4 billion

Florida

2,113,344

$46.5 billion

New York

2,039,018

$102.8 billion

Illinois

1,167,488

$43.9 billion

 

It’s interesting to learn that California, New York and Illinois, considered to be tough states in which to start a small business, are among the top five states with the highest number of active small businesses.

Tools and Resources

There are many tools and resources available for entrepreneurs to start companies, grow an existing business or to get involved with government bidding if they so choose. One very valuable resource is the Small Business Association. The SBA has many tools to help small businesses thrive in a competitive business environment. Those who are interested in the SBA’s services can head over to www.sba.gov to learn more about how businesses can stay afloat while growing their customer base and expanding the services they offer. The SBA also provides workshops, seminars, webinars and conferences that small business owners can attend to learn more about running a small business, including how to get certified and details about contracting with the government. It is highly recommended that small businesses take advantage of everything the SBA has to offer to help them  excel in a competitive world.

Danielle Calamaras | BidNet.com



[i] A.Jayakumar. For Second Year in a Row, Government Meets its Goal of Awarding Work to Small Businesses. 26 June. 2015. Thewashingtonpost.com. web. 21 Dec. 2015

[ii] n.p. Which States are the Most Small Business Friendly? Best and Worst Climates for Small Business. 18 Aug. 2015. Washingtonmonthly.com. web. 16 Dec. 2015

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