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There are countless reasons not to start a business. And yet, every year, about a million new businesses spring up in America, according to the Bureau of Labor Statistics.
Something inspires the nation’s entrepreneurs to give it a go — and a national small business workforce of some 61 million employees thanks them for it.
Every year, the Census Bureau asks business owners what their main reason for starting their business is. They provide a list of popular reasons for owning a business, and entrepreneurs rate each one by importance.
Small business finance experts at OnDeck analyzed the latest Census Bureau data to find the most common reason people want to start a business in every U.S. state and metro area.
Wanting a greater income (14 states) and a better balance between work and family (9 states) are the two most popular reasons why Americans start businesses.
New York and Delaware are the only states where “Couldn’t find a job” is the primary reason for owning a business. Many of those who lost their job in the pandemic were reluctant to take a new job on a lower rung.
East Coast business owners are often driven by family ties, such as a family business or role model.
West Coast owners are more motivated by family responsibilities and the freedom to work flexible hours.
More entrepreneurs in Delaware (33.1%) than in any other state start a business to help their community, followed closely by Louisiana founders (31.3%).
Business founders in Florida are the most likely to start a business to generate more income (68.7%) and to become their own bosses (69.2%).
The Most Popular Unique Reasons to Start a Business in Every U.S. State
According to the Global Entrepreneurship Monitor, entrepreneurship rates in the U.S. have been trending upward over the past two decades. But what are the main reasons people in America leap into entrepreneurship?
Wanting to make more income is a significant factor in 14 U.S. states, while flexible hours, the work/family life balance, and wanting to be a role model are top reasons elsewhere.
The States Most Likely to Start a Business For Different Reason
A study reveals that more entrepreneurs in Utah (65.4%) than in any other state start a business for the work and family life balance. Utah also happens to be the state home to the largest families on average, according to the U.S. Census Bureau. Meanwhile, business founders in Florida are the most likely to start a business to generate more income (68.7%) and to become their own bosses (69.2%). A 2023 study by WalletHub found Florida to be the second-best state to start a business.
The Most Popular Unique Reasons People Start Business in Major Metro Areas
According to the World Bank Group, the U.S. scores relatively highly (91.6/100) for the ease of starting a business based on factors like the time and cost involved. But how do the driving factors behind entrepreneurship vary across the country’s metro areas?
The top reasons given by business founders in each major metro area ranged from generating more income (as in the Chicago-Naperville-Elgin area) to a lack of job opportunities (New York-Newark-Jersey City).
The U.S. Metro Areas Most Likely to Start a Business for Different Reasons
In the McAllen-Edinburg-Mission metro area of Texas, 69.6% of entrepreneurs (more than any other metro area) started their businesses as it was the best avenue for their ideas. Meanwhile, Ogden-Clearfield (Utah) entrepreneurs are the most likely to start a business for the flexible hours (67.4%) and work/family life balance (73%).
Methodology: How Was This Study Conducted?
Data on the reasons for starting a business in each U.S. state and each of the 100 most populous metropolitan areas was taken from the Annual Business Survey (2020, latest data available), carried out by the U.S. Census Bureau.
The percentage of business owners who answered ‘very important’ to questions about different reasons for starting a business was tallied up for each state and metropolitan area.
To find the top states and metro areas for each reason, OnDeck found the locations where the highest proportion of local business owners considered a particular reason to be ‘very important’ in their decision to start a business.
The most popular unique reason for each state and metro area was calculated using a method akin to location quotient, i.e., a measure of how much more important that reason is to business owners in a given state or metro area than in the United States overall. For example, 65.4% of business owners in Utah said ‘balance work and family’ was very important to them as a reason for starting their business, which was 1.13 times higher than 57.6% of business owners who said it was very important to them in the United States overall. This means its location quotient was 1.13, and it was the highest of all reasons in Utah, which is why it was deemed Utah’s most distinct reason for starting a business.
The reasons in the survey ‘work for self’ and ‘start own business’ were excluded from the analysis due to being too similar to the reason ‘be my own boss.’ Population estimates from the U.S. Census Bureau were used to determine the 100 largest metropolitan areas by population.
Is there a reason Arkansas and Oklahoma are switched on the map?
Fixed.