Idaho Leads U.S. in Small Business Growth, New Report Finds

A new study from OnDeck reveals significant regional variations in small business growth across the United States, with Idaho emerging as the top state for entrepreneurial activity. The study, based on U.S. Census data from 2020-2021, analyzed the percentage growth of businesses with fewer than 500 employees across states, metropolitan areas, and counties.

Idaho saw a 6.55% increase in small businesses, adding 2,776 new firms year-over-year. This growth is part of a longer trend, with small business employment in the state increasing by 48.7% over the past 25 years, outpacing the national average.

The state benefits from low labor costs and a competitive job market, factors that have supported small businesses in avoiding workforce challenges faced in other regions.

By contrast, New York saw a slight decline in small businesses (-0.05%), while West Virginia experienced no change. New York’s population decline, particularly among younger workers and college graduates, has strained the state’s small business ecosystem. Ashley Ranslow, New York Director of the National Federation of Independent Business, highlighted affordability and the cost of doing business as key challenges, stating, “What we really want to focus on is affordability and cost of doing business in New York… and how we do everything we can to keep Main Street alive.”

The Orlando-Kissimmee-Sanford area in Florida experienced a 6.20% rise in small businesses, making it the top-performing large metropolitan area. The region’s success is partly attributed to incentive programs like Orlando Main Streets, which has generated 11,000 new jobs and more than 1,800 new businesses since 2008.

Lakeland-Winter Haven, another Florida metro, ranked second among medium-sized metropolitan areas with a 6.59% increase in small businesses. The area’s population growth, particularly among working-age adults, has spurred demand for service-oriented startups and childcare businesses.

Georgia also stood out, with LaGrange leading small metro areas with a remarkable 19.85% growth in small businesses. The Georgia International Business Park in LaGrange, one of the largest in the country, has attracted both Fortune 500 companies and local entrepreneurs, creating a vibrant environment for small businesses.

Sheridan County, Wyoming, recorded a 21.51% increase in small businesses, the highest growth rate of any county in the study. Developments such as the discovery of rare earth elements in local coal mines and workforce initiatives at Sheridan College have contributed to the county’s rapid growth.

However, such expansion has also led to growing pains. Michelle Junkins, Adams Township Trustee, expressed concerns about overdevelopment, saying, “We want to remain an agricultural community with growth that we want to be smart growth.”

The report underscores the growing importance of small businesses in the U.S. economy. Companies with fewer than 500 employees have created over 70% of new jobs since 2019 and now account for 51% of private employment. Applications for new businesses in 2024 are 50% higher than in 2019, with increasing diversity among entrepreneurs, including record numbers of self-employed women and minority business owners.

Despite these gains, growth remains uneven. While regions like Idaho and Florida thrive, states like New York face structural challenges, including high costs and population declines, that limit new business formation.

Images: Envato, OnDeck