Tom Still: Range of rankings exist on whether Wisconsin is good or bad for small business

Wisconsin is either second-best, third from the bottom — or someplace in between. I’m betting on the middle. No matter where the reality falls, there’s room for improvement.

A handful of surveys and reports in 2023 have offered rankings and observations about the “best places” for business in the United States, whether those places are cities or states. Here’s a summary:

Wisconsin is No. 2 for business survival. That’s according to the Southern Banking Company, which used U.S. Bureau of Labor Statistics to calculate the longevity of businesses formed mostly in 2011-12. Among the 8,199 private-sector businesses that opened in a 12-month period, about 43% (3,523) were still operating a decade later. A big drop-off was year five, when the survival rate dipped to 50%.

Iowa topped the list; South Dakota, Kentucky and Minnesota made up the rest of the top five. There’s likely a bit of “Midwest stubborn” at work, but certain types of businesses are more durable than others, such as manufacturing. Longevity is also helped by robust private and public support systems.

Wisconsin is No. 48 for minority entrepreneurs. Lendio, which is an online loan marketplace, used data from the Census Bureau and the Small Business Administration to evaluate all 50 states. Its summer 2023 report covered the percentage of businesses that are minority-owned, job growth at these companies, business loans to underserved communities and more.

In Wisconsin, the minority population is 21% but minorities own 8.2% of startups and 6.6% of all businesses under two years old. Better news: From 2019 to 2021 these companies saw 63% job growth. Other states in the bottom five were Mississippi, West Virginia, North Dakota and Montana.

Wisconsin is No. 23 overall. Utah-based Lendio took a broader look at small business, as well, analyzing federal data from 2016 through part of 2023. The study evaluated tax cuts, startup survival, cost of living, educated worker migration, loans, funding, consumer spending and incentive programs. Key findings included a five-year survival rate of 50.8%, 56 incentive programs, corporate tax rates of 7.9% overall, $8.5 million in loans per 100,000 per capita and a net influx of 18,500 educated workers. Perhaps those are COVID-19 or climate refugees — or boomerang Gen Xers who were raised in Wisconsin or nearby?

Wisconsin ranks among the six most expensive states to start a business. Simplify LLC, which advises companies on how to launch limited liability companies, concluded Minnesota was the most expensive startup state. It was followed by New York, Louisiana, Alabama, Alaska and Wisconsin. Simplify also ranked Wisconsin as the 12th-least tax-friendly state. The same study ranked Nevada as the least expensive state, yet Nevada has the nation’s highest unemployment rate. Leaders there are worried about dependence on the gambling industry.

Two Wisconsin cities made WalletHub’s 100 list for best large cities to start a business. They were Madison (34th) and Milwaukee (69th). Nineteen metrics were examined within three broad categories: Business environment, access to resources and business costs.

Wisconsin was almost invisible on WalletHub’s list of best small cities to start a business. The first city listed was Fitchburg (No. 287). Stevens Point, Kenosha, Appleton, Neenah, Wausau, Sun Prairie, Brookfield and Waukesha followed in the top 500.

It’s hard to draw conclusions when data is so diverse. Some experts have cited higher taxes or licensing hurdles facing small businesses in Wisconsin. Others have blamed declining or stagnant populations in rural counties. Many believe access to working capital is a factor, although there has been progress in angel and venture capital. Some entrepreneurs don’t know where to start, although information and support are readily available.

Policymakers should work to attract businesses, large and small, to Wisconsin, but growing from within is vital. Wisconsin business applications (an initial step) grew 47.1% from 2019 through 2022, according to the U.S. Chamber of Commerce. That was good for 39th on a per capita basis — better than Minnesota and Iowa but worse than Illinois, Indiana and Michigan. Maybe competing in our neighborhood is the most important ranking of all.