January Business Formation Report

In October 2024, national challenges brought unpredictability and high stakes for states, causing big upsets in business formation trends. Strikes across key industries disrupted supply chains, likely halting growth in some states while spurring surges in new formations where employees felt disenfranchised or driven to start their own ventures. The looming elections brought a mix of cautious optimism and hesitation, as businesses braced for potential regulatory changes or economic shake-ups. And ongoing supply chain issues and inflation strained people’s budgets, forcing entrepreneurs to pivot strategies to manage the rising costs. Meanwhile, drought and the threat of bird flu outbreaks raised concerns in agriculture and food production sectors, adding further hurdles for states heavily reliant on these industries. Together, these factors created a dramatic showdown, separating states with diverse, resilient economies from those unable to weather the onslaught.

States like Florida, California, Colorado, and Vermont clearly benefited from their robust tourism and entertainment sectors, but others, like Oklahoma, Iowa, and Mississippi powered through thanks to grit and consistency in the face of environmental challenges. These states’ investments in diverse industries are undoubtedly enabling them to tackle challenges head-on and maintain their momentum. Florida in particular made a stunning comeback, climbing dramatically after a tough summer, likely buoyed by its resilience in hurricane recovery, tax advantages, and a reinvigorated tourist season. Iowa and Oklahoma also stand out—Iowa’s rise appears tied to lower corporate taxes and a focus on rural development, while Oklahoma’s growth seems linked to an influx of remote workers drawn by its lower cost of living. Meanwhile, top performers like Texas, California, and Delaware continue to hold steady in the top 10, showing no signs of slipping up anytime soon.

Several states saw significant drops in rank this October, with Utah, Alabama, Maryland, Montana, and Michigan landing in the bottom five for business formations. Utah and Montana may simply be cooling off after strong performances earlier in the year—Utah has now spent two consecutive months at the bottom, while Montana faces its first downturn after a strong rise in activity. Maryland’s efforts to modernize its tax code could have temporarily slowed filings as entrepreneurs took a beat to understand potential changes. Despite low living and business costs, workforce shortages, rising expenses, and regional competition made it harder for these states to sustain momentum.

What’s clear from October’s shake-ups is that states thriving in the rankings are those that balance their playbooks. By diversifying economic arenas—especially investing in aerospace, defense, and logistics—while keeping tourism and hospitality industries strong, these states are positioning themselves for long-term success. It’s not just about excelling in one area; it’s about creating a dynamic, multi-industry ecosystem that can weather national challenges and keep businesses in the game.