If you read the first part of our article, you will recall the table that assessed each state. If not, we recommend reading ‘Worst States to start a business in 2025, part one,’ because the numbers you see here reflect the rating of doing business in the state.
State-specific recommendations
- 41. West Virginia’s Entrepreneurial Landscape
(B.E: 48/50 | Access to Resources: 50/50 | B.C: 13/50)
Challenges: The commercial opportunities continue to evolve in West Virginia. With low costs and increasing support for small businesses, West Virginia is a state worth considering for entrepreneurs looking for a lower-cost alternative. The state is gradually improving its entrepreneurial landscape, making it more attractive to new businesses.
Recommendations: Use the low costs to build small, smart companies that solve real problems, especially in areas like healthcare, education technology, or local delivery services. Many government and nonprofit programs offer money for innovation in rural areas. Try to partner with community colleges to train workers. Focus on solving problems in your local area that could also help other parts of the country.
- 42. Vermont’s Business Growth Opportunities
(B.E: 42/50 | Access to Resources: 42/50 | B.C: 33/50)
Challenges: Growth opportunities in Vermont can be particularly appealing to startups in certain sectors. Despite its small size, the state fosters a business-friendly environment, though entrepreneurs must navigate limited market access and higher operating costs. The Vermont business environment requires strategic planning to thrive.
Recommendations: Build an enterprise that fits Vermont’s values—like sustainability, craftsmanship, and community. This works well for brands that sell directly to customers or have a social mission. Look into programs like the Vermont Community Loan Fund. Hire talent remotely, but keep your story connected to Vermont’s charm. It helps attract customers who care about values.
- 43. Pennsylvania: Startup Support
(B.E: 44/50 | Access to Resources: 33/50 | B.C: 38/50)
Challenges: Pennsylvania startup support is relatively strong, offering many resources for entrepreneurs. However, entrepreneurs must still deal with competition, high taxes, and rising operational costs. Despite these challenges, the state provides a supportive business ecosystem that encourages growth for new ventures.
Recommendations: Start your business in Philadelphia or Pittsburgh—these cities have top universities and innovation centers (like for robotics or life sciences). Use support from groups like Ben Franklin Technology Partners. Focus on one area or industry and grow your reputation before expanding.
- 44. Managing Business Expenses in Hawaii
(B.E: 19/50 | Access to Resources: 49/50 | B.C: 42/50)
Challenges: Hawaii is expensive, far from the U.S. mainland, and doesn’t have easy access to talent or money. Tourism controls most of the economy, so there’s not much space for tech or new ideas. Hawaii’s General Excise Tax (GET) applies to nearly all business activities, and most expenses are not deductible, leading to higher operational costs for startups.
Doing business in Hawaii presents unique entrepreneurship challenges with its expenses. High living costs and the difficulty of shipping goods to the islands contribute to the high cost of doing business. Entrepreneurs in Hawaii must deal with these challenges carefully to ensure they can remain profitable.
Recommendations: Use Hawaii’s uniqueness to your advantage. Start businesses that work online or improve the tourist experience using technology or sustainable products. Join startup programs like Blue Startups for support. Avoid businesses that need lots of inventory. Instead, connect with mainland U.S. for funding and partnerships. Hawaii sells a dream—make sure your brand does the same.
- 45. Startup Ecosystem in New Hampshire
(B.E: 38/50 | Access to Resources: 45/50 | B.C: 36/50)
Challenges: The startup ecosystem in New Hampshire offers entrepreneurs a mix of advantages and challenges. While the state’s opportunities are abundant, there are still significant hurdles to overcome, such as regulatory requirements and limited access to funding. New Hampshire’s startup scene is growing, but there’s room for improvement.
Recommendations: Take advantage of being close to Boston. Join networks and events there while enjoying lower living costs in New Hampshire. Get help from NH Tech Alliance and local universities. Focus on online services or digital products that don’t need a big local market. Use the state’s low taxes and peaceful lifestyle to attract your team.
- 46. Business Regulations in Maryland
(B.E: 28/50 | Access to Resources: 17/50 | B.C: 47/50)
Challenges: Understanding how to navigate business regulations in Maryland is a key challenge for startups, which often struggle with bureaucratic hurdles and licensing requirements. Recent legislative proposals, such as a 2.5% tax on business-to-business services, could further impact the business climate. However, the state does offer some support for small business growth, despite these challenges.
Recommendations: If you work in cybersecurity, medical technology, or government services, Maryland can be a great place because of its location near U.S. federal agencies. Focus on innovative, lean business models. Work with TEDCO or local universities for funding and guidance. Maryland is not ideal for lifestyle businesses but works well for serious tech or government-focused startups.
- 47. Alaska’s Entrepreneurial Resources
(B.E: 17/50 | Access to Resources: 48/50 | B.C: 45/50)
Challenges: While Alaska is known for its natural beauty, the state offers limited entrepreneurial resources. Though Alaska provides some startup incentives, the lack of a thriving business ecosystem makes it a challenging place for new ventures. Entrepreneurs looking for strong support systems may struggle to find the resources they need to succeed.
Recommendations: Build a remote-first company—offer your product or service online and sell across the country. Try solving special Alaskan problems, like energy or transportation, and look for niche grants. Use programs that support rural or indigenous innovation. Keep your business simple and scalable to deal with the state’s difficult geography.
- 48. New Jersey: High Business Costs
(B.E: 43/50 | Access to Resources: 8/50 | B.C: 50/50)
Challenges: The cost of doing business in New Jersey can be a significant barrier for new businesses. With high costs, it’s not surprising that many entrepreneurs find it difficult to sustain a successful startup in this state. Entrepreneurs seeking to scale are burdened by a corporate tax rate of 9% on net income, expensive real estate, and tough competition, which may impact their long-term success.
Recommendations: Focus on industries with high profits, like software, financial technology, or biotech. Test your business in this busy area, but don’t depend on local support. Save money by using remote or hybrid work models. Check out programs like NJEDA and SBDC. Consider setting up in the suburbs to cut costs. Also, its proximity to major markets like New York City and Philadelphia gives businesses access to a large consumer base and a skilled workforce.
- 49. Connecticut’s Startup Challenges
(B.E: 49/50 | Access to Resources: 13/50 | B.C: 46/50)
Challenges: Entrepreneurs in Connecticut face significant startup challenges, particularly when it comes to the cost of doing business in New Jersey. Despite the state offering certain advantages, the high operating costs make it less appealing for new startups. Entrepreneurs may struggle with expensive business licenses, taxes, and regulations that slow growth.
Recommendations: Choose high-value industries like medical tech or finance tech where high costs can be justified. You can register your company in another state to avoid some taxes. Programs like CTNext can help. Think of Connecticut not as your launchpad, but as a good place for your headquarters while using New York’s big network of talent and funding.
Why is Rhode Island the Worst State to start a business?
(B.E: 50/50 | Access to Resources: 40/50 | B.C: 40/50)
Challenges: Rhode Island is often considered the bottom worst state to start a business in 2025, according to WalletHub’s business rankings. Entrepreneurs face high costs of doing business, limited access to entrepreneurial resources, and a challenging regulatory environment. Rhode Island’s business environment leaves much to be desired compared to other states.
Recommendations: Start a business that can grow without needing the local market—focus on online services or digital products. Use incubators like RIHub or Innovate Newport to grow your network. Partner with Brown University to find talent. Since funding is limited, look to nearby cities like Boston or NYC. Rhode Island can be your home base, but grow your business nationally.
Key takeaways for entrepreneurs
- Learn the Rules in Each State. Every U.S. state has different laws, taxes, and rules for businesses. Before you start, check the local regulations carefully. This will help you follow the rules and avoid problems later.
- Check What Support Is Available. Look at how easy it is to find investors, skilled workers, and business support in the state. Some places offer better help for startups than others.
- Understand the Costs. Business costs—like rent, electricity, internet, and taxes—are not the same in every state. Choose a location where you can afford to scale over time.
- Think About Your Customers and Partners. A good location makes it easier to reach customers, work with suppliers, and deliver your product. Being close to transport or big cities can save time and money.
Instead, look for states with strong economies, low taxes, and support, which we’ll cover in our upcoming article on the best U.S. states for entrepreneurs.
Even in states with harsh startup climates, success is possible, especially when you:
- Match your industry to the local economy
- Operate lean and digitally
- Tap into grants, tax breaks, and partnerships
- Use your international edge to innovate where others hesitate
Our team will be happy to help you choose the best state in which to register a company. Currently, we recommend three states where clients most often start a business: Wyoming, Delaware, and Nevada.
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