Best (And Worst) States For Business Climate For Solution Provider Startups In 2019

Entrepreneurs starting a solution provider business should consider states with a thriving economy, a large base of potential small and midsize business customers, and limited competition from other solution providers.

Favorable Climates

Entrepreneurs making plans to launch a solution provider business have a lengthy to-do list, from developing the company’s technology and marketing strategy, to raising capital, to hiring employees. But even with the best plans and products, a startup may ultimately succeed or fail because of outside factors such as the number of potential business customers in a state, a state's growth rate, and competition from other solution providers.

This year's Best States analysis looks at the business climate and competitive environment in each state. Criteria included each state’s 2018 GDP growth rate, the number of businesses in each state, including small and new businesses, state population and other metrics.

The analysis included the number of solution providers in each state, based on data in The Channel Company's solution provider database. Generally speaking, the states with better economies and more business opportunities have lower rankings in solution provider competition and vice versa. California, for example, is No. 50 – dead last – given the huge number of solution providers that already call the Golden State home.

Also included in the analysis is each state's economic rankings according to a number of media surveys including CNBC America's Top States for Business 2019, U.S. News and World Report and WalletHub – the latter the source for the economic health ranking presented in this slide show (including the District of Columbia, hence New Mexico’s No. 51 ranking).

The following are the 10 states with the highest rankings for business climate/competitive environment, listed from No. 10 to No. 1. The states with the lowest rankings are then listed from No. 41 to No. 50.

Best States No. 10: Arizona

2018 GDP Growth: 4.0 Percent

2018 GDP Growth (Rank): No. 4

Solution Provider Competitive Saturation (Rank): No. 33

Total Number of Small Businesses: 553,779

Economic Health Rank: No. 10

Best States No. 9: Virginia

2018 GDP Growth: 2.8 Percent

2018 GDP Growth (Rank): No. 13

Solution Provider Competitive Saturation (Rank): No. 46

Total Number of Small Businesses: 723,962

Economic Health Rank: No. 13

Best States No. 8: North Carolina

2018 GDP Growth: 2.9 Percent

2018 GDP Growth (Rank): No. 12

Solution Provider Competitive Saturation (Rank): No. 35

Total Number of Small Businesses: 890,398

Economic Health Rank: No. 11

Best States No. 7: Massachusetts

2018 GDP Growth: 2.7 Percent

2018 GDP Growth (Rank): No. 14

Solution Provider Competitive Saturation (Rank): No. 41

Total Number of Small Businesses: 652,661

Economic Health Rank: No. 20

Best States No. 6: Georgia

2018 GDP Growth: 2.6 Percent

2018 GDP Growth (Rank): No. 16

Solution Provider Competitive Saturation (Rank): No. 40

Total Number of Small Businesses: 1,041,515

Economic Health Rank: No. 18

Best States No. 5: Colorado

2018 GDP Growth: 3.5 Percent

2018 GDP Growth (Rank): No. 5 (Tie)

Solution Provider Competitive Saturation (Rank): No. 36

Total Number of Small Businesses: 611,495

Economic Health Rank: No. 3

Best States No. 4: California

2018 GDP Growth: 3.5 Percent

2018 GDP Growth (Rank): No. 5 (Tie)

Solution Provider Competitive Saturation (Rank): No. 50

Total Number of Small Businesses: 3,941,201

Economic Health Rank: No. 35

Best States No. 3: Texas

2018 GDP Growth: 3.2 Percent

2018 GDP Growth (Rank): No. 9

Solution Provider Competitive Saturation (Rank): No. 49

Total Number of Small Businesses: 2,627,724

Economic Health Rank: No. 7

Best States No. 2: Florida

2018 GDP Growth: 3.5 Percent

2018 GDP Growth (Rank): No. 5 (Tie)

Solution Provider Competitive Saturation (Rank): No. 48

Total Number of Small Businesses: 2,471,260

Economic Health Rank: No. 5

Best States No. 1: Washington

2018 GDP Growth: 5.7 Percent

2018 GDP Growth (Rank): No. 1

Solution Provider Competitive Saturation (Rank): No. 37

Total Number of Small Businesses: 590,908

Economic Health Rank: No. 4

Worst States No. 41: Louisiana

2018 GDP Growth: 1.1 Percent

2018 GDP Growth (Rank): No. 41

Solution Provider Competitive Saturation (Rank): No. 19

Total Number of Small Businesses: 437,437

Economic Health Rank: No. 47

Worst States No. 42: New Mexico

2018 GDP Growth: 1.8 Percent

2018 GDP Growth (Rank): No. 31

Solution Provider Competitive Saturation (Rank): No. 13

Total Number of Small Businesses: 154,257

Economic Health Rank: No. 51

Worst States No. 43: South Dakota

2018 GDP Growth: 1.3 Percent

2018 GDP Growth (Rank): No. 39

Solution Provider Competitive Saturation (Rank): No. 3

Total Number of Small Businesses: 85,252

Economic Health Rank: No. 9

Worst States No. 44: Rhode Island

2018 GDP Growth: 0.6 Percent

2018 GDP Growth (Rank): No. 47

Solution Provider Competitive Saturation (Rank): No. 8

Total Number of Small Businesses: 99,821

Economic Health Rank: No. 39

Worst States No. 45: Vermont

2018 GDP Growth: 1.2 Percent

2018 GDP Growth (Rank): No. 40

Solution Provider Competitive Saturation (Rank): No. 4

Total Number of Small Businesses: 77,683

Economic Health Rank: No. 34

Worst States No. 46: Montana

2018 GDP Growth: 0.9 Percent

2018 GDP Growth (Rank): No. 45

Solution Provider Competitive Saturation (Rank): No. 7

Total Number of Small Businesses: 118,315

Economic Health Rank: No. 19

Worst States No. 47: Mississippi

2018 GDP Growth: 1.0 Percent

2018 GDP Growth (Rank): No. 42

Solution Provider Competitive Saturation (Rank): No. 9

Total Number of Small Businesses: 254,598

Economic Health Rank: No. 46

Worst States No. 48: Hawaii

2018 GDP Growth: 1.0 Percent

2018 GDP Growth (Rank): No. 42

Solution Provider Competitive Saturation (Rank): No. 10

Total Number of Small Businesses: 128,863

Economic Health Rank: No. 28

Worst States No. 49: Wyoming

2018 GDP Growth: 0.3 Percent

2018 GDP Growth (Rank): No. 48

Solution Provider Competitive Saturation (Rank): No. 1

Total Number of Small Businesses: 65,462

Economic Health Rank: No. 40

Worst State No. 50: Alaska

2018 GDP Growth: -0.3 Percent

2018 GDP Growth (Rank): No. 50

Solution Provider Competitive Saturation (Rank): No. 6

Total Number of Small Businesses: 71,841

Economic Health Rank: No. 50