Each year, Fit Small Business names the top U.S. states for female entrepreneurs, using criteria such as how business-friendly the states are and the number of female-owned start-ups already operating there. Historically, coastal states like California and New York have dominated the list. But with so many start-ups gravitating towards the coast, middle America and the South have been attracting a much larger share of talented entrepreneurs.
To determine which of the 50 states offered the best opportunities for female entrepreneurs, Fit Small Business used the following criteria:
- General business climate – 25 percent
- Number of women-owned businesses – 25 percent
- Overall economic and financial health – 25 percent
- Safety and well-being for women – 25 percent
Only two states who made the list last year joined the ranks in 2019: Georgia, which ranked No. 1 last year but fell to 10th place this year, and Texas, which jumped from No. 8 to No. 1.
Challenges to Overcome
The outlook for women-owned businesses is better than ever in the United States. According to the National Association of Women Business Owners, over 11 million U.S. businesses are currently run by women, generating $1.7 trillion in annual sales. And the number of women-owned start-ups is growing as well. In 2018, 23 percent of entrepreneurs who sought angel investing were female, up from 19 percent in 2014.
Still, women in business continue to face significant challenges, particularly when it comes to funding. Women-owned firms that seek traditional business loans still receive about 45 percent less than firms owned by men. What’s more, female entrepreneurs have a much harder time getting venture capital than their male counterparts. According to a 2014 study from Babson College, only 15 percent of VC-funded businesses in the U.S. had even one woman on the leadership team, and less than 3 percent had a woman CEO. Not surprisingly, the study also found that only 6 percent of all angel investing firms had women at the helm.
All that said, however, women-owned businesses are beating the odds and thriving across the United States. Since 1999, their numbers have grown by 3, 000 percent.
The Most Female-Friendly States
Texas took top honors from Fit Small Business this year mainly due to its business-friendly environment and the percentage of women-owned start-ups that are thriving in the state. Plus., according to CNBC, the state gets high marks for access to capital, the strength of its workforce and its overall economy. Texas also has no state income or corporate tax, although the cost of doing business is still relatively high.
Ohio came in second on the Top 10 list this year, mainly because of its strong infrastructure. With major ports on the Great Lakes and Ohio River, two international airports, and 21 interstate roads, it is truly an export-export hub that offers easy access markets across the U.S. and abroad. The Buckeye State also boasts a low cost of doing business and a low cost of living, though CNBC ranks it 34th in quality of life.
The third highest-ranked state for female entrepreneurs in the U.S. this year is Minnesota. Despite its frigid winters (or maybe because of them!) the state is known as a warm, inviting place that is particularly welcoming to start-ups and women entrepreneurs. It boasts a large number of SBA Women’s Business Centers per capita and is home to a number of support networks for women, including Minneapolis-based Women Entrepreneurs of Minnesota. CNBC ranks the state No. 3 in education and quality of life and No. 7 in technology and innovation.
The rest of the top 10, in descending order, were:
- North Carolina
- North Dakota
You can read more about why they were selected here.
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