Methodology: Behind The Research
CRN's first annual "Best States To Start A Solution Provider Business" study covers all 50 states and is a compilation of 37 measures collected from both a variety of independent third-party sources and original research.
The analysis covers a broad range of criteria grouped into six categories: labor and employment costs, workforce experience and education, taxes and regulations, innovation and growth, business opportunity, and quality of life/personal cost of living.
CRN's unique solution provider audience has a very specific set of needs and in order to appropriately weight the importance of each criteria, CRN conducted a survey among 250 technology solution providers in February 2013. This exclusive survey helped to determine the importance that technology solution providers place on each of the criteria measured, and those importance factors were applied to each metric to determine each state's score and ranking.
[Related: Interactive Map: The Best States To Start A Solution Provider Business ]
Technology solution providers are primarily focused on those criteria that are related to a skilled and educated workforce, technology innovation and economic growth, and favorable corporate, sales and personal tax rates when selecting a state in which to start a new company. Additional items that increase a state's appeal to this group are efficiencies that translate to competitive costs, areas that attract IT jobs, and fast-growth firms.
Each category includes a number of metrics. Labor expenses, for example, includes labor costs and costs of doing business, unemployment insurance taxes, and energy costs. Taxes and regulation metrics include a state's corporate income and property taxes, tax incentives, and regulatory environment.
The worker education and experience category includes the percentage of a state's population over age 25 with bachelor's degrees or higher; employment in IT jobs as a share of a state's private sector; employment in managerial, technical and professional jobs as a share of a state's private-sector employment; and the education levels of a state's migrants (from within the U.S.) and immigrants (from outside the U.S.).
The growth and innovation ranking was based on such criteria as gross state product, entrepreneurial activity, patents awarded to businesses and individuals, the value of a state's exports per manufacturing and service worker, the share of the private sector employed as scientists and engineers, the share of high-tech jobs in the private sector economy, and others.
The criteria used to rank a state's business opportunities included the number of businesses in a state, the number of fast-growing firms, the number of business startups and failures as a percentage of total establishments, a state's economic strength and diversity, access to capital, availability of residential broadband, high-wage traded services (the share of employment in sectors in which the average wage is above the national median for traded services), and manufacturing value added (per production hour worked as a percentage of the national average).
The quality of life/personal cost of living rankings were determined using such criteria as a state's population, cost of living, individual income taxes, sales taxes, median household income, crime rates, and the percentage of a state's population that uses the Internet.
"The 2012 New State Economy Index," issued by the Information Technology and Innovation Foundation, was a key source for the data used in the CRN analysis. Information sources for tax and regulatory criteria included reports from the Tax Foundation, the U.S. Census Bureau (including its American Community Survey), the U.S. Bureau of Economic Analysis, the U.S. Bureau of Labor Statistics and the U.S. Bureau of Economic Analysis.
Additional important sources included the U.S. Energy Information Administration, the Council for Community and Economic Research, the Federation of Tax Administrators, Forbes Best States For Business, CNBC and the FBI.