Would you be surprised to learn that South Dakota is considered the most friendly state for small businesses and entrepreneurs?  And that it is followed by Nevada (2), Texas (3), Wyoming (4) and Washington state (5)?

Or that at the bottom of the list, the most unfriendly locales for small businesses are: District of Columbia (51), New Jersey (50), California (49), New York (48) and Vermont (47)?

I know what you’re wondering:

These particular rankings come from the Small Business and Entrepreneurship Council, a non-profit small business advocacy group.  Every year for 14 years they’ve ranked the states in something they call the “Small Business Survival Index.” 

Measuring Public Policy and Cost of Doing Business

The Index measures whether state and local government policies are friendly toward entrepreneurship. Much of the focus is on whether the state policies make it more expensive for small businesses to do business.

The Index is not without its critics.  However, whether you agree with the Index rankings or the methodology – or not -- it’s highly instructive. Let’s take a look at what the Index measures – because the issues are ones that can result in less money dropping to your bottom line:

• Legal liability costs

Does it mean that you have to pick up and move somewhere else to be successful? Or that you’re destined to be unsuccessful?  Of course not!  Determined business owners will find a path to success no matter where they are.

No, the real value of an Index like this is using it as a platform for change.  Just because things are the way they are, doesn’t mean they have to stay that way.  If you wanted a list of things to talk with your lawmakers about – especially those lawmakers who tout their support of small businesses -- the factors on this list would be a good starting place. The goal would be: get them to make your state less expensive to do business in... and more friendly toward entrepreneurs.

The Full Rankings

This PDF report of the Small Business Survival Index explains the methodology and the factors used in the rankings.  It also ranks the states for each of the 36 government-related costs factors, in case you want it broken down.

Now tell me, what do YOU think?  Where does your state rank?  Are you surprised by any of the rankings?

Anita Campbell is the Founder of Small Business Trends, an online community for small businesses.