While the old saying “It’s a man’s world” is passé, there’s still evidence men have the upper hand in business—particularly the startup world. Women-owned startups face significant social and economic challenges, resulting in a remarkable disparity between male and female-launched businesses.
For example, a recent study by Biz2Credit revealed that women who apply for business loans typically get 45% less than their male counterparts. Stereotypes and dated traditions play into this; 94% of venture capital firms are dominated by male decision-makers, according to Fortune magazine, while lingering concerns about the interruption of a woman raising a family leads some funders and supporters to question the likely success of female-owned ventures.
But it’s not all doom and gloom. According to statistics from The University of New Hampshire, the number of female entrepreneurs is growing steadily in the U.S.; 23% of entrepreneurs seeking angel investing were female in 2018, up from 19% in 2014. And here’s an even more encouraging figure: Since 1972, female-owned businesses in the U.S. have surged 3,000%.
This growth is positive, but there’s more we can do to level the playing field. That’s why we set out to find the best states in the U.S. for female entrepreneurs in 2019. With an ever-changing business climate, new legislation, and markets becoming saturated with new business, states that are the best for female entrepreneurs are quickly changing. Only two of the states that made our top 10 list last year made our list this year, with Texas jumping from eighth to first and Georgia from first to tenth.
In ranking each state for its desirability and outlook for female entrepreneurs, we considered the following overall criteria for each state: general business climate/opportunity (25%), the number of female-owned business (25%), economic and financial health (25%), and safety and well-belling for women (25%). By analyzing each of these we were able to determine which states not only are well-positioned for startups and new ventures, but specifically female-owned startups.
Read on to see which states made the top 10. We also list our definitive ranking of all 50 states below.
Texas used to conjure images of cowboys in the Wild West, but it’s becoming a startup hotspot with new business increasingly saddling up in the Lone Star State. Texas is hands-down one of the nation’s top states due to its business-friendly legal and economic climate. Put aside having no corporate or income taxes and a high rate of startup growth; startups are flocking to Texas high startup success rate. Plus, with a below average cost of living, you can quickly increase your living standards and improve your lifestyle for less.
Ohio often flies under the radar, but it’s a state that has a long-standing history of producing success. With a record high rate of astronauts and presidents coming from Ohio, it’s no surprise that it’s also a state with a high business growth density and a significant number of companies that grow quickly. In a state that embraces drinking cheap beer and chili over caviar, this frugal state is also very affordable to live in and has no corporate taxes, making it a great environment for startups.
It’s safe to say the term “Minnesota nice” isn’t just a stereotype. Minnesota is the top state for female economic, safety, and social well-being. These factors, coupled with a high rate of startup growth, lands it in our number three position overall. It may be a cold state, but there’s something to be said for starting a business in a state where people are hospitable and there are a number of support networks for female entrepreneurs, such as a high number of SBA Women’s Business Centers (per capita) and organizations like Women Entrepreneurs of Minnesota.
Washington may be known for its waterscapes and outdoor adventures, but it’s also home to Seattle, a city of nerds that powers big businesses like Microsoft, Amazon, Google, and Bing. The tech attraction in the Pacific Northwest has also produced some incredible startups, and with no corporate tax rate (only a small Business and Occupation tax of 1.5% of gross receipts) and a higher overall ranking for female economic and well-being rating, Washington is well-positioned to be the next Silicon Valley.
You might be surprised to find Alabama in the fifth slot on this list, but chances are you’re overlooking their low cost of living, beautiful beaches, Southern hospitality, and hospitable business climate. Alabama’s history earns it a lot of bad press, but it’s evolving into a state where women-owned startups can flourish. A below average cost of living coupled with a high share of growing new businesses and low tax burden make it a top pick for women seeking a place to launch their startup.
6. North Carolina
For those who want it all, or at least a bit of everything, North Carolina is your state. It’s one of our top 10 states for opportunity for women in business due to having a higher than average percent of startup success, a lower than average cost of living, and a low corporate tax rate of only 3%. Beyond that, North Carolina provides female entrepreneurs with a great way of life and unbeatable environs; the Great Smoky Mountains, a stunning coastline, and cities gleaming with bright lights will quickly make this state home.
Massachusetts has a pioneering history and innovative spirit that translates into a great deal of startup success. It has a higher than average percent of startups that succeed and a high density of high growth businesses—all on top of an educated talent pool. Massachusetts would rank above the seventh position if it weren’t for having a higher than national average cost of living and average corporate tax rate of 8%. It’s ideal for those doing business within the EU as well, as it has some the U.S.’s shortest transatlantic flight times.
8. North Dakota
North Dakota isn’t exactly synonymous with big cities and bright lights, but for starry-eyes female entrepreneurs who value nature and affordability, it’s just the right place. It lands at number eight on our list, which is largely due to top ratings for women’s safety and social support. It also has a low corporate tax rate of 4.31% and an affordable cost of living. It is a great choice for adventurous nature-lovers with remote work-oriented startups or those involved in agriculture, outdoor sports, and recreation.
It’s hard not to love a state that loves cheese as much as Wisconsin, but they also have some business chops. They land in the number nine position mostly due to their opportunities for women in business, coupled with overall women’s economic health and social well-being. It also has a slightly lower than national average cost of living, but this is offset by their 7.9% corporate tax rate and small high-growth company density. If you crave a rich lifestyle, however, Madison and Milwaukee are great cities with ethnic diversity, a foodie culture, and a number of cultural festivals and events year-round.
Forget the matronly image of Southern belles; Georgia “peaches” are dominating in the business world a higher than average number of female business success stories. Plus, the state enjoys one of the nation’s highest numbers of high-growth companies per capita. It is also in the top three states for business climate and opportunity and has a lower than average cost of living. And you can’t beat the well-rounded living; Atlanta and Savannah are both good options for fun, entertainment, and history.
Complete Ranking of Best States for Female Entrepreneurs 2019
Click on each ranking criteria for additional data.
States in this list are ranked using four main metric categories. These comprise both general business environment and gender-specific factors that influence business success and livability for women. The data we collected was analyzed and weighted based on the importance of each category.
Here is an overview of our ranking methodology:
General Business Climate/Opportunity (25%)
Without considering the gender of business owners, we looked at general criteria such as the rate of startup growth, share of scale-ups (companies that have grown 20% or more over the past three years), and the density of high-growth companies to find the overall business climate for each state. This information reveals the likelihood of startup success and failure in each state.
Opportunity for Women in Business (25%)
Following the analysis of the general business climate, we looked at the female-centric opportunities and support systems available to female entrepreneurs on a state-by-state basis. These factors included the percent of minority-owned businesses; the number of Small Business Administration Women’s Business Centers, which are key in female entrepreneurship funding; and the availability of public/private support networks such as business associations, clubs, and groups geared towards female business owners.
Economic & Financial Health (25%)
Naturally, economic factors and state financial health play large roles in the likelihood of startup success. These include the average cost of living (startups are generally tight on funds and so the ability to live affordability during the startup process is important), as well as business tax rates. These two factors influence the amount of possible revenue a business will have at the end of each fiscal year.
Livability for Females (25%)
Even with a positive business climate, low tax rates and cost of living, and opportunities for women in business, general livability matters greatly to female entrepreneurs. We factored in each state’s overall social support for women, as well as women’s health and safety, to determine which states offer positive environments wherein women can thrive.
Women are shaping the nation’s business climate with an ever-increasing number of innovative businesses. While there are a number of factors that influence a startup’s success—many of which are difficult to control—choosing the right state for a dream business is something you can choose. Be sure you review our top 10 above carefully, then make your leap into entrepreneurial success in 2019.