Idaho leads the nation in small business growth, according to a new report

A new study from OnDeck shows significant regional differences in small business growth across the United States, with Idaho emerging as the state with the highest entrepreneurial activity. The study, based on 2020 to 2021 U.S. Census data, analyzed the percentage growth of companies with fewer than 500 employees across states, metropolitan areas and counties.

Idaho saw a 6.55% increase in small businesses, adding 2,776 new companies year-over-year. This growth is part of a longer trend: Small business employment in the state has increased 48.7% over the past 25 years, above the national average.

The state benefits from low labor costs and a competitive labor market, factors that have helped small businesses avoid the labor challenges they face in other regions.

In contrast, New York saw a slight decline in small businesses (-0.05%), while West Virginia saw no change. New York’s population decline, particularly among younger workers and college graduates, has strained the state’s small business ecosystem. Ashley Ranslow, New York director of the National Federation of Independent Business, highlighted affordability and the cost of doing business as key challenges, stating, “We really want to focus on the affordability and cost of doing business in New York… and how we do business.” Do everything we can to keep Main Street alive.”

The Orlando-Kissimmee-Sanford region of Florida saw a 6.20% increase in the number of small businesses, making it the best-performing large metropolitan area. The region’s success is due in part to incentive programs such as Main Streets of Orlandowhich has created 11,000 new jobs and more than 1,800 new businesses since 2008.

Lakeland-Winter Haven, another Florida metro area, ranked second among mid-sized metro areas with a 6.59% increase in small businesses. The region’s population growth, particularly among working-age adults, has fueled demand for service-focused startups and childcare companies.

Georgia also stood out, where LaGrange led small metro areas with a remarkable 19.85% growth in small businesses. The Georgia International Business Park in LaGrange, one of the largest in the country, has attracted both Fortune 500 companies and local entrepreneurs, creating a vibrant environment for small businesses.

Sheridan County, Wyoming, saw a 21.51% increase in small businesses, the highest growth rate of any county in the study. Developments such as the discovery of rare earth elements in local coal mines and workforce initiatives at Sheridan College have contributed to the county’s rapid growth.

However, such expansion has also led to growing pains. Michelle Junkins, Adams Township Trustee, expressed concerns about overdevelopment, saying, “We want to remain an agricultural community with growth that we strive for as smart growth.”

The report highlights the growing importance of small businesses in the U.S. economy. Companies with fewer than 500 employees have created over 70% of new jobs since 2019 and now account for 51% of private employment. In 2024, applications for new businesses are 50% higher than in 2019, with diversity among entrepreneurs increasing, including a record number of self-employed women and minority business owners.

Despite these increases, growth remains uneven. While regions like Idaho and Florida are thriving, states like New York face structural challenges, including high costs and population declines, that limit new business creation.

Images: Envato, OnDeck