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Friday, Oct. 24, 2014

My view: Utah named 'most friendly' state for small business

By Jon Lieber, For the Deseret News

Published: Tue, Aug. 12 12:00 a.m. MDT

 Salt Lake City.

Salt Lake City.

(Ravell Call, Deseret News Archives)

When you think of things that Utah does better than any other state, you might think of the state’s natural beauty or the charitable nature of its people. But another superlative can now be added to that list: Utah has been named the most friendly state in the nation for small businesses.

Thumbtack.com, a consumer service that links individuals to business professionals who can help them accomplish personal projects, partnered with the non-partisan Kauffman Foundation to ask nearly 13,000 small business owners nationwide what they thought made for a friendly environment for them to serve their customers. And for the second year in a row, Utah was named as the friendliest state in America.

Utah did well across the 11 metrics in the study, ranking in the top five of every category except for one (more on that in a minute). Small business owners said the state made it easy to start a business, and the excellent workforce and low cost of living made it easy to hire new workers. When it came to regulations, Utah was one of the friendliest states in the nation, earning A or A+ grades for its licensing, tax code, zoning, environmental, health and safety and labor laws.

And Utah’s small business owners were extraordinarily optimistic – owners and operators of small businesses said they felt more optimistic than business owners in any other state. It could be the great access to outdoor activities or the booming economy in Utah, but business owners felt great about the future. A therapist in Salt Lake City said, “Salt Lake City is a great place to start a small business. While more and more people are moving to the state, there is still ample room for new businesses to get started and prosper, which is encouraged by the local government.”

The one area of the survey where there is room for improvement was the availability of training and networking programs in the state - nationwide, awareness of these tended to improve overall friendliness scores by 10 percent in the survey. While Utah did well in this category, earning a B+, there is room for civic organizations to work with local governments to improve the visibility of such programs.

Nationwide, small business owners told us they wanted to spend their time building their businesses and serving their clients - time they had to spend dealing with government rules and regulations was a major distraction from this core focus. Small businesses don’t have the employees or resources to dedicate to complicated regulatory regimes. This was an issue across the board, even in states that were friendlier to small business like Utah.

States that made regulations easy to comply with and that created, and consistently enforced, simple rules for businesses did better in the survey than states that instead piled on time-consuming regulation. A video producer in Farmington echoed this common sentiment in our survey: “If a small businessman didn't have to be an accountant and a lawyer in addition to an expert in the subject he or she is starting a business in, there'd be a lot more successful businesses.”

The costs in terms of time lost to small businesses in complying with regulations, specifically professional licensing regulations, were so dramatic that the friendliness of licensing regulations had twice the effect of the complexity of the tax code on our overall friendliness metrics. For states like Utah, which received an A+ for the friendliness of its licensing, this was not a problem. But in other states where the licensing rules are so complex, with overlapping and sometimes contradictory rules in different jurisdictions, the unfriendliness of licensing caused small businesses to perceive their state governments as downright hostile to them.

Other states’ losses are Utah’s gains, however, and this shows in the fact that Utah experienced the second-fastest population growth in the nation last year, attracting businesses and workers from all over the country. Utah’s business friendliness has resulted in a deluge of new jobs, resulting in the third-lowest unemployment rate in the country. And it has brought in fast-growing tech companies looking to expand.

Thumbtack gave Gov. Herbert the first ever Champion of Small Business Award for the outstanding showing that Utah had in our survey. Through a concerted effort to attract out-of-state businesses to open up in Utah, and the legacy of an educational system that has created a top-notch workforce, Gov. Herbert has earned this award on behalf of all the institutions that help make Utah a great place to do business.

Jon Lieber is the chief economist at Thumbtack.com.

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1. John Charity Spring
Back Home in Davis County, UT,
Aug. 12, 2014

Utah is number one for small businesses because it has repudiated left-wing policies that kill businesses through government regulation. As Charles Dunoyer famously stated "one consequence of the industrial regime is to destroy artificial inequalities, but this only highlights natural inequalities all the more clearly." Dunoyer continued "superior abilities . . . are the source of everything that is great and useful . . . Reduce everything to equality and you will bring everything to a standstill. " This is why state intervention of any kind must be rejected. Natural inequalities such as differences in physical, intellectual, and moral capabilities are crucial to an economy of growth and innovation.

2. Ultra Bob
Cottonwood Heights, UT,
Aug. 12, 2014

The conservative notion that business people are the only actual people in this world is false. Actually the business people are a minority and the actual majority of people, even those living in Utah are perfectly happy to let others run the rat race while they pursue the more important priorities life, liberty and the pursuit of happiness.

Business people seem to feel justified and even admired for their devotion to the cause of separating other people from their wealth and thus work very hard and use every strategy to accomplish their goal. The collateral damage they do to the society is unimportant to the business ego. It's as if they are at war.

The only thing is, when they get so good at the war, they destroy the things that make business possible and in the end destroy business itself. Not to worry, the businessman thinks, he will just pick up his marbles and move to a new game. Only it may be hard to find any new games.

So brag if you will, but know that good for business is not necessarily good for people.

3. anti-liar
Salt Lake City, UT,
Aug. 13, 2014

Yes, part of the reason Utah is so business-friendly is Utah's notoriously low wages. We have a child poverty problem here in Utah, among other problems, as a result.

4. Baron Scarpia
Logan, UT,
Aug. 13, 2014

Now if we could only clean up our air, that could be a key incentive to attract business to the state. In the winter, which you'd think would be ideal to promote skiing and winter sports to business scouts checking out Utah's quality of life and business climate, the polluted inversions turn them off. Increasingly, we're seeing that bad air is now hurting the state's economy.

I was reading not long ago that Utah probably couldn't attract the Olympics again due to our polluted air, even with bribes! The international media would have a field day beaming images of our polluted air around the globe. That would definitely not be good for business!

5. 2 bits
Cottonwood Heights, UT,
Aug. 13, 2014

It's a "GOOD" thing... Right?

Ultra and anti-liar seem to spin it into being a "BAD" thing, and have only bad things to say about it.

I wonder if that's because it's about Utah (and we know how they feel about Utah)... or because it's about businesses (and we know how they feel about businesses). Or BOTH?

Seems to me it is GOOD news for Utah AND for businesses in Utah. But they seem to see it as a negative. Strange how two types of people can look at the same situation and one proclaim the glass is empty... the the other sees the glass is full.

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Re: "know that good for business is not necessarily good for people"...

I've yet to get a job from someone who wasn't in business (of some sort)...

I guess we could ALL work for the Government... but that probably wouldn't work (for long).

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Re: "The conservative notion that business people are the only actual people in this world is false"....

I'm a Conservative... I don't think business people are the only people in the world... Maybe your view of Conservatives is false...