Connecticut earns an ‘F’ for small business friendliness
Small businesses gave Connecticut an F for small business friendliness, according to Thumbtack’s annual Small Business Friendliness Survey.
Nearly 18,000 U.S. small business owners responded to the survey, including 224 in Connecticut. The study asked respondents to rate their state and city governments across a broad range of policy factors. Thumbtack then evaluated states and cities against one another along more than a dozen metrics.
“Small business owners on Thumbtack have consistently told us that they welcome support from their governments but are frequently frustrated by unnecessary bureaucratic obstacles,” said Jon Lieber, chief economist of Thumbtack. “Connecticut small businesses tell us the environment is extremely challenging for small business owners, and that the state isn’t offering enough support to navigate the difficult regulatory environment.”
“It is extremely difficult in today’s economy,” commented an interior designer in Hartford. “My business reputation is very good; however, many projects are frozen. People simply don’t feel secure spending their money because of the slow economy.”
Key findings for Connecticut:
- Connecticut performed worse in 2015 than it did in 2014, when it ranked #35 and earned a D overall.
- Connecticut’s highest scores were C- grades for both licensing regulations and ease of hiring.
- Bridgeport earned a B- grade for overall business friendliness.
- Connecticut’s worst scores were a composite F for its regulatory environment as well as an F grade for training and networking programs.
- Neighboring New York earned an overall friendliness score of a D and ranked No. 32 nationally.
Of the 36 states ranked in the survey, Connecticut finished 34th. Only Illinois and Rhode Island finished worse in the survey, with California and New York founding out the bottom five.
Hartford was the worst ranked city in the survey, beating out Alburquerque, N.M., Buffalo, N.Y., New Haven, and Winston-Salem, N.C., in the bottom five.
Texas was the top-ranked state and had four cities ranked in the top 10 for small business climates. New Hampshire, Utah, Louisiana, and Colorado rounded out the top five.
Breaking down the survey
Originally developed in 2012, the survey is in its fourth year and reaches almost 18,000 small business owners annually across the country.
According to Lieber, the key drivers for business friendliness in states are training experience, tax regulations, and labor regulations. As for cities, training is still valued as the top key driver followed by licensing regulations and website experience.
“When evaluating their cities, small businesses said the ease of compliance with licensing rules mattered far more than tax rates,” Lieber said in a press release. “Tax equity — the actual rate at which business owners pay taxes — mattered far less than any measure of regulatory compliance.
“For example, labor rules were 88% more important in driving state friendliness scores when compared to tax rates,” he added.
As for training experience being a top factor in state and city rankings, Lieber said that offering training on developing a business and navigating the local economic and policy environment was the single biggest factor that influenced perceptions of friendliness.
“In cities, training was 78% more important than the number two factor,” he said. “On the state level, small businesses who had a positive training experience were 1.5 times more likely to rate their states as being very supportive.”
Thumbtack is a technology-based marketplace that connects Americans with experienced local professionals to help them accomplish more than five million personal projects each year, surveyed 17,633 small businesses across the United States. The 36-question survey asked about the friendliness of states and cities toward small business, including specific questions about the regulatory environment for labor, tax, and licensing rules.
Thumbtack evaluated states and cities against one another along more than a dozen metrics. Respondents to the survey were largely very small service businesses with five or fewer employees. Every state in the country was represented, although only states with more than 50 responses and cities with more than 30 responses were given a grade.
Visit www.thumbtack.com/ct for information about the survey.