How friendly to businesses is Nevada?
If you ask Forbes Advisor, which on Wednesday released a ranking of the best and worst places to start a business, the answer is: Not very friendly.
Forbes Advisor, a site that offers personal finance advice and reviews, looked at 18 metrics across five categories: business costs, business climate, financial accessibility, economy, and workforce. Categories and metrics were given different weights to reflect their perceived importance.
Overall, Nevada ranked 44th best place in the country to open a business. Or perhaps it’s more apt to call Nevada the 7th worst place to open a business. Only Florida, Oregon, Michigan, Vermont, New Mexico and New York were deemed worse.
Nevada is one of eight states that does not have an income tax, and its corporate and property tax rates are among the lowest in the country. That all helped place Nevada in the top 10 in the business costs category, which together accounted for 30% of the overall ranking.
Nevada placed toward the middle of the pack in the business climate category, which used Small Business Administration and Bureau of Labor Statistics data to calculate the growth of small businesses and the business survival rate between March 2020 and March 2021.
(Note: That time frame aligning with the beginning of the pandemic shutdown is coincidental. March-to-March is the timeframe used by the SBA for its annual economic profiles.)
In Nevada, four of five (80.2%) businesses that opened in March 2020 were still open a year later and had survived that first (no doubt tumultuous) year. For comparison, 89.1% survived in Washington, the category leader, and 74.6% survived in Hawaii, which rounded out the bottom of the list.
Nationally, 81.6% of new businesses survived their first year.
Between March 2020 and March 2021, Nevada saw a net increase of 5,940 businesses because 8,772 closed but 14,712 opened. Among small businesses, there was a net increase of 6,113 businesses.
But collectively Nevada saw a decrease of 108,329 jobs during that time frame.
More recent employment data shows the state rebounding from the brutal economic impact of the beginning of the pandemic.
According to the SBA, there are currently around 310,000 small businesses in Nevada and 42.8% of workers are employed at a small business.
Nevada’s more favorable rankings in Forbes Advisors’ business costs and climate categories were canceled out by poor showings in financial accessibility, economy and workforce categories.
The financial accessibility category looked at SBA data on the average funding available to businesses. According to the SBA, the average funding for each business is $18,429 in Nevada. For comparison, in North Dakota, which ranked first in the financial accessibility category and third overall, there is $34,894 available. In this category, Nevada ranked in the bottom 10 states.
The economy category looked at gross domestic product per capita, the cost of living index and per capita personal expenditures. In this category, Nevada ranked in the bottom five states.
When it came to the workforce, Nevada ranked dead last. This category looked at the unemployment rate, the percentage of the population that is of working age, the percentage of degree-level workers and the number of universities and colleges per capita.
Nevada has one of the highest unemployment rates and the lowest ratios of colleges or universities per capita. Nevada also has one of the lowest percentages of workers with a degree – only 25.5%.
There are, of course, myriad metrics one can use to determine business friendliness. (State lawmakers’ willingness to give Tesla, the Raiders, and multiple other entities tax breaks, subsidies, and other “incentives,” perhaps?)
Forbes Advisor’s choices resulted in Nevada’s rankings being quite low. Similar ranking attempts from other commercial websites have varied.
When WalletHub, a personal finance company, attempted their version of the “Best & Worst States to Start a Business” in July 2021, Nevada ranked 32nd – sandwiched between Alabama and Ohio. When Looka, a design company, calculated their “Best US States for Entrepreneurs” in July 2022, Nevada ranked 37th.
For those who’d rather look on the brighter side, The Ascent, a website associated with the investing advice site The Motley Fool, put together the “Top 10 Best States to Start Your Small Business” in August 2022, Nevada snuck into the top 10.