In WalletHub’s 2019 “Best & Worst States to Start a Business” report, Arizona ranked among the best in the nation, landing at number seven among all states.
The report assessed states on three main criteria: business environment, which includes metrics like average work week length, growth in number of small businesses, and industry variety; access to resources, which includes higher-education assets and financing accessibility; and business costs, such as labor, corporate taxes, and office-space affordability.
Arizona ranked within the top twelve for both “business environment” and “access to resources,” aggregating a final score of 54.39 and propelling itself above other entrepreneurially strong states such as California and Washington.
“For small businesses and start-up entrepreneurs, there are vast amounts of business resources available at little or no cost,” Local First Arizona executive director Thomas Barr said. “The business community here has a mentality of wanting to connect people together, and many of our cities and towns are seen as close-knit. Starting a business in Arizona allows you the opportunity to affordably get access to resources, people and education to help your business grow.”
The state offers a myriad of resources to help small businesses develop. For example, Arizona has a range of incubators to provide entrepreneurs with training and funding. Phoenix, specifically, offers a workforce development center that helps businesses of all sizes increase employee productivity.
Local startups are also succeeding in securing venture capitalist funding. In fact, small businesses secured a record number of investments from venture capital firms last year, posting their best year since at least 2006. According to a report by PitchBook/National Venture Capitalist Association (NVCA), state venture capital firms invested over $538.9 million over 89 deals last year.
The increase in resources and funding is crucial to the state’s economy, as small businesses are its heartbeat. According to the U.S. Small Business Administration, over 99 percent of Arizona’s businesses are small, and more than 44 percent of Arizona employees work for a small business.
A study by Civic Economics found that every $100 spent at a locally-owned business refuels the economy with $43. But for every $100 spent at non-locally-owned business, just $13 remains in the local economy.
“The more we are able to find ways to spend money at local businesses in Arizona, the greater the economic impact,” Barr said. “Many of our cities in Arizona are making strides to prioritize local businesses in their procurement, which makes it more accessible for small businesses to win contracts with municipalities. The cities of Phoenix and Tempe have taken bold steps to commit to channeling their spending to local businesses and host annual events to attract more companies to learn the process of doing business with them.”
Although Arizona ranked in the top ten of the study, it still has room for improvement. With competitive regulatory policies, extensive resources, and increasing funding from venture capitalists, Arizona has the potential to obtain the top position.
“Arizona has an incredible opportunity to continue work to ensure the right resources and tools are in the hands of small businesses,” Barr concludes. “In order to continue improving our score the state should ensure that small businesses have access to proper capital in order to start and grow their companies; have affordable options when looking to open a store or office; have strong networks to organizations that provide education and advocacy for them; and are given higher priority for winning local procurement contracts. All of these resources and opportunities are necessary in order to have a vibrant local economy.”
This story was originally published at Chamber Business News.