What’s the best state in the country to start a new business? Unfortunately for local would-be entrepreneurs, the answer may be anywhere but Maryland.
According to a new study from personal finance site GO Banking Rates, Maryland ranks 45th out of all 50 states on a composite of business-related factors, including startup activity, the number of available employees, the education levels of those possible employees, business tax climates, cost of living, and more.
The small percentage of available workers and the high costs of living were the hardest-hitting factors in Maryland’s low ranking, according to the report. The state also had the third-worst business survival rate, with more ventures going out of business than have been created in recent years.
Surely business entrepreneurs everywhere are still recovering from a long economic downturn and increasingly globalized markets; 57% of small businesses in the U.S. now report new competition from digital companies, for example. And yet two of Maryland’s neighbors, Virginia and Delaware, placed among the top 10 best states to start a new business in the rankings.
Virginia scored the highest business survival rate in the country, with nearly twice as many new establishments opening doors as those that closed. It also boasts a highly educated workforce and “a better-than-average opportunity share of new entrepreneurs,” according to the study’s authors.
Delaware, meanwhile, has a favorable tax climate for businesses and the fifth-highest gross domestic product ranking per capita in the country. Delaware ranked fifth in the overall rankings, with Virginia in ninth place.
Despite their close proximity, the vastly different business climates between Maryland and its neighbors underscore the very point of the study: that a range of environmental factors can have a big impact on economic survival.
“Ecosystem is a useful metaphor for evaluating areas of business,” said Stewart Thornhill, executive director of the Zell Lurie Institute for Entrepreneurial Studies at the University of Michigan. “For instance, it’s hard to say any one factor makes a rain forest a rain forest. But if you take away one critical factor, it can undo the whole thing — in much the same way business systems work.”