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Missouri ranked as one of the worst states for businesses


Missouri has been ranked among the worst states for businesses by a federal agency. 

According to data from the U.S Bureau of Labor Statistics, Missouri has the second-highest rate of business failures. Washington D.C. sees the highest rate of business failures with 28% in the nation's capital failing within the first year. Missouri is a close second with a 27.2% first-year failure rate. 

Missouri’s five-year failure rate is even higher at 60.5% which is the highest in the country. The state's 68.7% 10-year failure rate places it at seventh in the country. California has the lowest business failure rate within the first year, despite having a much higher average cost of living than Missouri.

Columbia Ward 5 City Councilman Donald Waterman says the state can't do anything to improve those numbers until they get a better understanding of how the data was gathered.

"Without knowing what the causes were, you're guessing, I would want to know how they formulated it, how they came up with their data to achieve the ranking that we did."

LendingTree's chief credit analyst an small business expert Matt Schulz says it's difficult to pinpoint why Missouri was so high on the list.

"It's really hard to know what would make a state a tougher place to have small businesses survive," Schulz said. "With Missouri it's a relatively low income state so that could create some challenges both on the consumer demand side, but also on the side of the entrepreneur, who may not just have as much income to be able to hold onto that small business and maintain it over long period of time.

"There are any number of reasons that Missouri could be at the top but unfortunately they are at the top."

The United States Small Business Administration estimates that there are over 500,000 active small businesses in Missouri. Between 2016 and 2019 the number of small businesses increased each year. In 2020 that number dipped for the first time in five years, due in part to the COVID-19 pandemic. 

But the numbers for Missouri aren't all bad.

The state reported that 79.8% of all Missouri businesses employ fewer than 10 people. In August 2022, Midwest Startups ranked Columbia as the 22nd best Midwestern city for startups. Columbia moved up five spots from its 2021 ranking.

"Columbia is not only a good place to start a business it's one of the best places to start a business in the country," Ward 1 City Councilman Nick Knoth said. "We have had incredible growth in the startup Industry especially in female owned startups."

Knoth says part of Columbia's success is because having the University of Missouri in town helps foster economic growth by bringing talented young minds into the city. He also says Columbia does a great job supporting entrepreneurs start their business.

"We focus heavily on supporting entrepreneurs and starting it. It could be things as simple as 'how do you do a business license? How to find office space, what is a business plan?' Things like that. We help them from the very beginning."

Article Topic Follows: Missouri

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Mitchell Kaminski

Mitchell Kaminski is from Wheaton, Illinois. He earned a degree in sports communication and journalism from Bradley University. He has done radio play-by-play and co-hosts a Chicago White Sox podcast.


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