10 most entrepreneurial states

Opening up a small business in a tough economy is a risky gamble. But these 10 states saw more startup activity than anywhere else nationwide, according to the Kauffman Index of Entrepreneurial Activity. Here's why.

1. Arizona
Arizona
2011 startup rate: 520 per 100,000 adults

Arizona is a sizzling spot for startups. People were more likely to launch businesses here than in any other state in the country last year.

Arizona has benefited from a steady stream of entrepreneurs migrating from less business-friendly states like California. The lure? Business and property taxes are low, as are workers' compensation costs, according to the Arizona Commerce Authority.

What's more, the labor pool is highly educated, as schools such as Arizona State University and the University of Arizona churn out a steady stream of science and technology grads. The state encourages firms to upgrade employees' skills, giving grants to those that offer in-house job training.

That's key, since tech firms dominate Arizona's new business landscape. Software and semiconductor makers are big here, as are solar, clean-tech and renewable energy technology firms. More traditional fields like retail and tourism also are hot.


Source: 2012 Kauffman Index of Entrepreneurial Activity, published by the Kauffman Foundation. The 2011 startup rate for each state is based on a yearly national survey of about half a million people -- adults aged 20 to 64 who start a business each month with 15 or more hours worked. In Arizona, for example, Kauffman found that 520 of every 100,000 adults started businesses in 2011.
By Parija Kavilanz @CNNMoney - Last updated June 13 2012: 1:25 PM ET
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10 most entrepreneurial states

Opening up a small business in a tough economy is a risky gamble. But these ten states saw more startup activity than anywhere else nationwide. Here's why.

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