The 10 Best States To Do Business In

There's No Place Like Home

Entrepreneurs seeking to start a solution provider business have a number of important choices to make: What technology should I focus on? What vendors should I bring on as partners? How can I embrace the cloud?

One factor that could have significant impact on the success of a new business involves a much more basic question: What state do I call "home?"

In a groundbreaking new research project, The Best States To Start A Solution Provider Business, CRN Research gathered data on all 50 U.S. states across a variety of parameters, from the educational and experience level of a state's available workforce to labor and business costs to a state's tax and regulatory burden.

We milled it all together, measured the states against each other and ranked them according to how solution provider business-friendly they are.

Here's a look at the 10 that came out on top as the best states to do business in.

No. 10: Oregon

Solution Provider 500 Companies: 2

Oregon's high ranking for innovation and growth (No. 7) gets a boost from its good scores for gross state product growth (ranked No. 3) and inventor patents (also No. 3). The state ranks No. 16 for overall business opportunity, including a No. 3 ranking for manufacturing value added, defined as the manufacturing value added per production hour worked as a percentage of the national average.

While Oregon ranks No. 14 in the education and experience level of its workforce, its overall labor/business costs are moderately high, ranked at No. 31, and the state's rank for taxes and regulations is even less favorable (No. 33).

Oregon's quality of life/personal cost of living rank (No. 27) is helped by the fact it has no sales tax.

Oregon has one solution provider on CRN's Tech Elite 250, none on the Fast Growth 100 and 50 Up-And-Comers, and two on the Next-Gen 250 list.

No. 9: Massachusetts

Solution Provider 500 Companies: 15

You won't find another state with such contrasting rankings. The state is ranked No. 1 for the experience and education of its workforce. It's No. 1 in the percentage of adults with a bachelor's degree or higher (39.1 percent). And the region's thriving tech sector is arguably second only to California's Silicon Valley. The state is also ranked No. 2 for overall innovation and growth (second to California) and No. 5 for business opportunities.

Now the bad news. Massachusetts is dead last in labor/business costs, as well as in overall taxes and regulations. Its 8 percent corporate income tax is ranked No. 33. It's No. 43 in property taxes.

Massachusetts has seven solution providers on CRN's Tech Elite 250, four on the Fast Growth 100 and 50 Up-And-Comers, and four on the Next-Gen 250 list.

No. 8: Georgia

Solution Provider 500 Companies: 18

Georgia ranks an impressive No. 4 for overall business opportunity and a respectable No. 16 for innovation and growth -- which gets a boost from the state's No. 4 rank for entrepreneurial activity.

On the expense side, Georgia does well in taxes and regulation (No. 4). But, it's ranked only No. 28 for its labor and business costs. And, its workforce education and experience ranks only a middle-of-the-pack No. 24.

Georgia has eight solution providers on CRN's Tech Elite 250, six on the Fast Growth 100 and 50 Up-And-Comers, and 10 on the Next-Gen 250 list.

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No. 7: California

Solution Provider 500 Companies: 49

You would expect California to be on top of the tech rankings. And in some ways, you'd be right. California, for example, is ranked No. 1 for its overall innovation and growth opportunities, thanks to high scores in such criteria as entrepreneurial activity (No. 1) and inventor patents (No. 2).

Also not so surprising is the fact that California is an expensive place to do business. It's ranked No. 38 for overall labor and business costs and No. 40 for taxes and regulation.

But, the education/experience level of its workforce is ranked only No. 12. And, it's ranking for overall business opportunity is a disappointing No. 21. All of which reminds us that Silicon Valley isn't all there is to California.

California has 37 solution providers on CRN's Tech Elite 250, 15 on the Fast Growth 100 and 50 Up-And-Comers, and 23 on the Next-Gen 250 list.

No. 6: Arizona

Solution Provider 500 Companies: 9

Arizona offers potential for entrepreneurs looking for a place to start a business. The state is ranked No. 3 in business opportunity and No. 10 for its innovation and growth.

Arizona is also attractive for its impressive No. 11 ranking for its relatively low labor and business costs as well as its respectable No. 17 rank for taxes and regulation. (The state is ranked No. 1 for the lowest unemployment insurance tax.) The education and experience level of its workforce, however, is only ranked a so-so No. 22.

The state's overall ranking would be even higher but for its somewhat disappointing No. 34 rank for quality of life/personal cost of living. Blame the 6.6 percent sales tax and a No. 41 ranking for crime.

Arizona has four solution providers on CRN's Tech Elite 250, two on the Fast Growth 100 and 50 Up-And-Comers, and four on the Next-Gen 250 list.

No. 5: Maryland

Solution Provider 500 Companies: 23

Maryland is in the top five states despite being ranked No. 47 for its high labor and business costs, behind only Massachusetts, Rhode Island and New York. But then you're paying for a workforce that's ranked No. 2 for its level of education and experience. (It's second only to Massachusetts in the percentage of the adult population with a bachelor's degree or higher, and second only to Virginia for its information technology jobs rank.) Maryland also impresses with its scores for overall innovation and growth (No. 5) and overall business opportunity (No. 10). Its No. 29 rank for taxes and regulation is a bit unattractive -- but it's very competitive against states like Massachusetts and California. Interesting fact: Maryland has the highest median household income at $70,004

Maryland has five solution providers on CRN's Tech Elite 250, two on the Fast Growth 100 and 50 Up-And-Comers, and six on the Next-Gen 250 list.

No. 4: Washington

Solution Provider 500 Companies: 6

As home to such tech giants as Microsoft and Amazon, you'd expect Washington to have a lot to offer solution provider businesses. And, it does both in terms of its educated, experienced workforce (No. 5) and rank for overall innovation and growth (No. 3). And the state is ranked No. 1 for the share of the private sector employed as scientists or engineers, as well as No. 4 for the number of information technology jobs as a share of private sector employment. The overall business opportunity rank, however, is no higher than No. 25: There are large areas of the state beyond the Seattle area that are very rural, after all. The labor and business costs are ranked No. 24, while overall taxes and regulations rank a relatively unfavorable No. 32. Washington's overall rank gets a boost from its lack of a personal income tax.

Washington has six solution providers on CRN's Tech Elite 250, two on the Fast Growth 100 and 50 Up-And-Comers, and four on the Next-Gen 250 list.

No. 3: Colorado

Solution Provider 500 Companies: 15

Colorado has quite a bit going for it, coming out No. 3 overall thanks to its highly educated, experienced workforce (36.7 percent of its adult population has a bachelor degree or higher) and its high scores for innovation and growth (the state is ranked No. 3 for entrepreneurial activity).

The state is far from the cheapest place to do business, however. Colorado is rated No. 36 for overall labor/business costs. Its ranking for overall taxes and regulation is a middle-of-the-road No. 24. And, the state ranks No. 19 for overall business opportunity.

Colorado has excellent scores for overall quality of life/low cost of living -- the state's 2.9 percent sales tax is the lowest among all 45 states that levy such a tax.

Colorado has nine solution providers on CRN's Tech Elite 250, two on the Fast Growth 100 and 50 Up-And-Comers, and five on the Next-Gen 250 list.

No. 2: Virginia

Solution Provider 500 Companies: 46

Virginia has a lot going for it. The overall education and workforce experience level is ranked No. 3, behind Massachusetts and Maryland. The 35.1 percent of the adults with a bachelor's degree or higher ranks it No. 7. And, it's ranked No. 1 for the number of IT jobs as a share of private-sector employment, an indicator many Virginia companies have significant IT operations. The state is ranked No. 6 for business opportunities, not so surprising given the exploding economy in the region. And, it's ranked No. 15 for overall innovation and growth and No. 1 for the number of fast-growing companies. Virginia ranks No. 8 in overall taxes and regulations. But, labor and related business expenses are high, putting it at No. 32. Virginia also ranked No. 1 for quality of life/personal cost of living.

Virginia has 15 solution providers on CRN's Tech Elite 250, 22 on the Fast Growth 100 and 50 Up-And-Comers, and 21 on the Next-Gen 250 list.

No. 1: Utah

Solution Provider 500 Companies: 1

Given that there's only one Utah solution provider on the SP500, the state is apparently undiscovered country for the channel. But, our analysis shows that entrepreneurs looking for a place to set up shop should have the state on their radar. Utah is ranked No. 1 for its low taxes (its 5 percent corporate income tax is among the lowest) and moderate regulatory environment. Its labor and related business costs are ranked No. 8.

But, Utah isn't just about low costs. It's No. 2 for business opportunity and No. 9 for innovation and growth -- that includes its surprising No. 1 for awarded patents. And, it's No. 4 for fast-growing companies, behind only Virginia, Massachusetts and Maryland. Interesting fact: 90.1 percent of Utah households are online, highest in the U.S.

Utah has one solution provider on CRN's Tech Elite 250, none on the Fast Growth 100 and 50 Up-And-Comers, and one on the Next-Gen 250 list.