The Healthiest State(s) for Business: What Matters More - 'Where' or 'How' You Operate?
Joe Sweeney
Mar 3, 2025
They say the three keys to a successful business are “location, location, location.” Think of the local business that thrives in the heart of a bustling neighborhood, or the tech startup that picks Silicon Valley to be right in the middle of the action.
It’s easy to assume that choosing the “right” place is half the battle. But in today’s digital economy, does your ZIP code really hold that much sway over your success? What if, instead, it’s really just about how you manage your business - investing intelligently, managing cash flow, upskilling your team, and staying adaptable?
To explore this question, this report will analyze data from the United States Census Bureau to discover which states have grown the most over the past decade, as well as incorporating insights from Ben Rubenstein, Co-Founder and President at Setpoint.io and John Berkowitz, Co-Founder and CEO of OJO and Movoto.
Setpoint.io, based in Austin, Texas, provides technology infrastructure for real estate-backed lending, helping financial institutions streamline operations and improve efficiency. Rubenstein’s experience in scaling businesses and navigating different state economies offers valuable perspectives on the role of location in business success.
Added to that, OJO and Movoto are two companies that have made strategic decisions about location and operations to fuel their growth. Berkowitz’s experience spans multiple locations globally, including Austin, St. Lucia, and Bangalore, and provides a unique perspective on the evolving role of location in business.
This topic is also especially relevant in a world where remote work and digital commerce have expanded the boundaries of what’s possible.
For Setpoint, location plays a key role in business operations, but it’s not just about tax incentives—it’s about talent, collaboration, and network effects.
“Texas is a very pro-business state,” says Rubenstein. “It’s much easier to operate here than in California, and the talent pool in Austin has grown tremendously over the last decade.”
As another example, Berkowitz discusses his decision to base his companies in multiple locations: Austin, St. Lucia, and Bangalore. “Location is an asset,” says Berkowitz. “Proximity to investors and partners is key, and Austin has been an ideal location for us. It’s not just about tax incentives – it’s about access to talent, partners, and networks. In St. Lucia, the unique skills of our team and government incentives make it a great place to hire while staying cost-efficient.”
However, no matter where businesses call home, there’s a common thread among the successful ones: they focus on financial health, smart growth strategies, and intelligent cash flow management.
We’ll explore both sides of the equation - does your location give you an edge, or is it more about making smart moves wherever you are? The answer may surprise you. Whether you’re running a small local business or a national tech company, there’s a lot to learn about balancing place with practices. So, let’s get into it and see what really makes businesses thrive in any state - or in any “state” - they find themselves in.
The Healthiest States for Business
The map and table below leverages data from the United States Census Bureau, specifically from the Statistics of U.S. Businesses (SUSB), and was analyzed by the team at Upflow. Scroll over the map to discover each state's combined score, bringing together 10-year payroll growth and 10-year firm growth. Scroll down to the table below the map for a different view on the same data.
Feel free to toggle columns in the below table by clicking on each of the headings to see the ranking by data point.
The Growth in Businesses over Time
Is Location Really the Key?
For decades, business success has seemed to hinge on finding just the right spot - whether it’s setting up a store on a busy main street or choosing an office in a city buzzing with talent and opportunity. But as the landscape changes, a new question has emerged: is where you run your business as crucial as it once was, or are the choices you make within your business what really drives success?
From the data, several key insights emerge:
States with Favorable Tax Policies Often Provide a Head Start
Some states attract businesses with their tax advantages, but success ultimately depends on how effectively companies reinvest these savings into growth and innovation. Rubenstein points out that while tax benefits are helpful, they’re not the primary driver of Setpoint’s location strategy. “For us, it’s really about talent and networks,” he says. “You need to be in places where you can hire the right people and be face-to-face with customers.”
Berkowitz also underscores the importance of building a location strategy that aligns with company needs. “We’ve used location as a competitive tool,” Berkowitz explains. “Our headquarters in Austin gives us proximity to investors, and St. Lucia offers a lower cost to operate and unique skills, while Bangalore provides access to another set of talented individuals. It’s all about what makes the most sense for your business goals.”
Access to Talent Fuels Innovation
States such as California and New York remain powerhouses because of their highly skilled workforces. Businesses in these areas tend to flourish by leveraging local expertise to create cutting-edge solutions.
As a fintech company, Setpoint recognizes the importance of being in a financial hub. “New York is huge for fintech,” says Rubenstein. “I moved there for a year and a half because it’s important for founders to be in one of the industry centers. The talent pool and access to capital make a difference.”
In addition, Berkowitz shares that Austin, Texas, has become a competitive location due to its rapidly growing talent pool. “We’ve seen Austin grow immensely over the years, and while it was once considered an unlikely place for a tech startup, it has proven to be a fantastic location for our company,” he says.
Remote Work Levels the Playing Field
Predominantly rural states, like North Carolina, Ohio and New Mexico, are closing the gap as many businesses embrace remote work. This trend allows companies to access talent and clients without the need to relocate to larger urban centers.
Ohio’s proximity to large talent hubs, for example, combined with its comparatively lower salary expectations compared to the major centers, make it an interesting location from which to attract remote workers.
Financial Practices Are the Great Equalizer
Companies in less business-friendly states often thrive by mastering cash flow management, investing in their teams, and staying flexible in the face of market changes. These practices frequently outweigh the benefits of location alone.
Berkowitz notes that while location is important, the real success of a company comes down to how efficiently it runs. “Location is about talent and money,” says Berkowitz. “The rest doesn’t matter. What truly matters is how well you manage cash flow and where you invest your next dollar to drive enterprise value.”
State Growth Correlates with Diversification
States that encourage diverse industries, such as Texas, show consistent growth. Businesses in these regions benefit from the resilience that comes with operating in a varied economic ecosystem.
“Texas has become a lot more expensive over the years, but it still offers a strong mix of skills and industries,” says Rubenstein. “In 2011, Austin was much cheaper, but even now, it’s still a great place for business.”
While location can offer significant advantages, our findings suggest that financial health, strategic decision-making, and adaptability are what truly drive long-term success. A prime location might open doors, but it’s how a business operates within those doors that makes the biggest difference.
Keys to a Thriving Business
Every successful business owner knows there’s no single path to growth. Some swear by staying ahead with the latest tech, others focus on creating a workplace culture that feels like family, and still others keep a laser focus on cash flow. But whether you’re running a small shop or a booming company, certain key practices can make all the difference - no matter where you’re located.
Successful businesses often share these core strategies:
Invest in Your Workforce
A business is only as strong as the people behind it. Companies that focus on training and career development build a skilled, adaptable team that can handle market shifts. High-growth states like Idaho and Utah have seen a boost thanks to workforce investment, showing that talent and skills go a long way.
Take Advantage of Local Incentives
Tax breaks and incentives are great perks if you’re in a state that offers them. But the key is knowing how to reinvest those savings. Businesses that effectively leverage tax benefits - like those in Florida or Nevada - don’t just save on costs; they use the extra cash to fuel growth, whether that’s new hires or improved tech.
Embrace Technology
Keeping up with the latest tech is a surefire way to boost efficiency. Whether it’s using automated cash collection or setting up remote work solutions, technology helps companies scale faster and stay competitive. It’s no wonder Californian businesses flourish; they’ve made tech innovation a core part of their strategy.
Build a Network
Networking isn’t just for conferences; it’s a real asset for businesses looking to grow. Companies that connect with others in their local community often find more clients, partners, and resources to tap into. Many high-ranking states foster these ecosystems, but any business, in any state, can benefit from a strong local network. “I’ve been in Austin for 14 years now, and I’ve built a critical network here,” says Rubenstein. “That’s invaluable.”
Master Cash Flow Management
Ask any seasoned business owner, and they’ll tell you that cash flow is king. Managing money well can be the difference between a thriving business and one that struggles. From regular cash flow checks to setting clear credit terms with clients, keeping a handle on cash flow keeps the doors open and paves the way for growth.
In the end, these practices - whether it’s workforce investment, smart tech adoption, or keeping cash flow healthy - are the real keys to thriving. Location can be a bonus, but it’s often these core strategies that give businesses their staying power, wherever they happen to call home.
Achieving Financial Stability in Any Location
Ask any business owner, and they’ll tell you: staying financially healthy isn’t about luck - it’s about planning, smart decisions, and a few tried-and-true practices.
While location can offer perks like tax breaks or lower operating costs, maintaining a steady cash flow is something every business, everywhere, needs to master - especially in this post-hypergrowth era when cashflow is under just as much scrutiny by investors as pure growth metrics like revenue growth and retention. "After all, a strong financial foundation is what keeps the lights on and opens up opportunities for growth.
As Berkowitz puts it, "Everything comes down to talent and money.” In other words, the financial health of a business is driven by how effectively resources are used, regardless of geographic location. A strong cash flow isn’t about where you are – it’s about how you manage the flow of money into and out of your business.
Here are some practical steps that any business can take to keep their finances stable - whether they’re in bustling New York City or a quiet town in Kansas:
Regularly Review Cash Flow Statements
Monitoring your cash flow statements regularly allows you to understand where your money is coming from and where it’s going.
This insight helps businesses make informed financial decisions and avoid potential shortfalls.
Make It Easier for Customers to Pay You
Simplifying the payment process for your clients can significantly improve cash flow. Offering multiple payment options - such as credit card payments, online portals, or bank transfers - makes it more convenient for clients to pay promptly.
Automate Cash Collection and Payment Processes
Delays in payments can severely impact cash flow. Automating cash collection processes helps ensure that payments are sent on time, reducing the lag between invoicing and receiving payment. Automated reminders and follow-ups can also help keep clients on track.
Establish Clear Credit Terms
Setting clear credit terms with clients - such as payment deadlines and interest on overdue payments - ensures smoother cash flow. This clarity helps avoid delays and encourages clients to meet payment obligations in a timely manner.
Negotiate Favorable Payment Terms with Suppliers
Negotiating longer payment terms with suppliers gives businesses more flexibility in managing their cash flow. This extra time can help ensure that revenue from sales is available to cover costs before bills are due.
Diversify Revenue Streams
Relying on one major source of income can be risky. By diversifying your revenue streams, businesses can create a more stable cash flow, ensuring that any disruptions in one area don’t jeopardize the entire financial health of the company.
Additionally, using user-friendly invoicing software and providing clear, easy-to-understand invoices can reduce delays caused by confusion or complications. The easier it is for clients to pay you, the faster you’ll receive payments, helping to keep your cash flow consistent and reliable.
Berkowitz also highlights the importance of maximizing resources: "We try to make money by determining where to spend the next dollar to generate enterprise value and EBITDA. Every dollar spent must contribute to enterprise value." For businesses looking to maintain financial stability, prioritizing investment in areas that directly contribute to growth and operational efficiency is key.
As Berkowitz explains, "For us, there is no system of decision-making besides what is the most intelligent, most efficient way to do a thing."
Methodology
This report is based on data from the United States Census Bureau, specifically from the Statistics of U.S. Businesses (SUSB), and analyzed by the team at Upflow.
We analyzed data covering the 10-year period from 2011 to 2021 (the most recent available data). For each state, we calculated the growth rate in both the number of firms and total payroll over that time.
To determine the overall ranking of the healthiest states for business, we averaged each state's 10-year payroll growth and 10-year firm growth to produce a combined score. This combined score was then used to rank the states.
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