New data has revealed the riskiest states to start a business this year.  

The research, conducted by leading law firm Schmidt & Clark, examined state-wide data on the number of business applications and the year-on-year change between November 2022 and 2023, the annual change of real gross domestic product (GDP) in quarter three of 2023, regional unfriendly customer ratings, and business failure rates within one year as of March 2022. The final index scores reveal the worst states to start a business in 2024.   

Arkansas ranks first, with the study assigning the state a final index score of 26.12 out of 100. As of the third quarter of 2023, the state’s annual change of GDP was 0.7%, the lowest in the nation and 85% lower than the national average. The state's businesses may also experience negative customer interactions, according to a study which rated customer friendliness and unfriendliness in the U.S.; with Arkansas being given a regional unfriendly customer rating of 94 out of 100, the highest score in the country.  

Rhode Island, with a final index score of 28.58 out of 100, is the second-worst state for business owners. The state’s business failure rates within one year are the highest in America, reaching 27% as of March 2022. Rhode Island’s annual GDP was also 3.9% as of the third quarter of 2023, 18% less than the national average.  

In New Hampshire, 25% of businesses are reported to have failed within one year as of March 2022, 12% higher than the national average. The state also has an unfriendly customer rating of 94 out of 100, tying with Arkansas for the top spot, resulting in a final index score of 29.58 out of 100.  

According to the study, Alaska is the fourth-worst state to start a business in 2024, with a final index score of 31.40 out of 100. The state had 3% fewer business applications between November 2022 and 2023 compared to the previous year, 128% less than the national average for business applications. Alaska also had a 3.6% change in annual GDP as of quarter three of 2023, 24% less than the average in America.  

Vermont businesses have a failure rate of 26%, according to the study, 17% higher than the national average. There was also a 1.7% change in business applications, 83% less than the average for business applications in America, leaving the state with a final index score of 32.42 out of 100. 

West Virginia, with a final index score of 32.49 out of 100, ranks sixth. On average, the state receives 73 business applications per 100,000 people, which is the lowest out of the top ten worst states for business owners. West Virginia also has a 3.7% change in annual GDP, 22% less than the national average.  

Mississippi ranks seventh, with a final index score of 34.41 out of 100. Maine follows in eighth place, with a final index score of 34.59 out of 100, and Connecticut in ninth place, with a final index score of 35.03 out of 100. Virginia ranks as the tenth worst state for business owners in 2024, with a final index score of 35.78 out of 100.  

A spokesperson for Schmidt & Clark has commented on the study: “Business is the driving force of America. In fact, small businesses generate 1.5 million jobs per year in the United States, according to research. This study names Arkansas as the worst state for businesses in 2024, followed by Rhode Island and New Hampshire, forcing aspiring entrepreneurs to think twice before opening a business in these top ten states.”