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Key Takeaways New business formation data shows entrepreneurs are increasingly launching companies in lower-cost, business-friendly states like North Carolina, Wyoming, Montana and Nevada instead of traditional startup hubs.
The shift is being driven by remote work, AI-powered businesses, and favorable tax and regulatory environments, while states like California and Florida are seeing slower business formation growth.
Entrepreneurs like to think big. When pondering need fulfillment, market share and brand buzz, founders imagine reaching the rarified aerie of Mount Olympus. Ambitious people have super-sized dreams.
As a result, founders often equate “bigger” to “better” when choosing where to plant their flag. After all, larger states and cities can offer superior physical and digital infrastructure, established and growing populations, a wealth of skilled talent and greater access to capital. Not to mention round-the-clock activities and cultural vibrancy.
But choosing states with a lighter footprint might have advantages that business owners are starting to notice. In many smaller states, there’s often a lower cost of doing business, from taxes to regulations, as well as a slower and more affordable quality of life. Add in the fact that smaller or less densely populated states have more reason to incentivize new business, and you could have a recipe for growth.
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