November Business Formation Report

Key Takeaways:

• Top-performing states like Texas and California remained at the top, thanks to diverse industries and strong infrastructure.
• Drought and agricultural threats caused declines in Iowa and Vermont
• Adaptable states with diverse industries fared better.

Presidential Election Spurs Both Optimism and Fear

November saw a 13% drop in business formations from the previous month, with 372,308 new registrations, down 2% year-over-year. While top states like Texas and California held their ground thanks to diverse industries and strong infrastructure, economic uncertainties sent others sliding down the rankings. Inflation, bird flu, and drought continued to challenge struggling states, while post-election uncertainty left some businesses hesitant to take the plunge. With shifting confidence levels, the months ahead will reveal who can keep up the momentum. Our data is sourced from federal and state Corporations Division data and our own research, using rolling 12-month totals and year-over-year comparisons for November 2023 and 2024.

November brought fewer surprises in the formation rankings as states settled into a rhythm after dealing with months of strikes, hurricanes, and pre-election uncertainty. With Trump’s reelection, a mix of concern and optimism hangs in the air, affecting economic confidence across the country. The top-performing states—California, Texas, and Colorado—continue to thrive, driven by diverse industries, strong talent pools, and favorable geographic advantages. Meanwhile, others are feeling the strain of cyclical problems like drought and other agricultural threats, leading to sharp declines in states like Iowa and Vermont. As the colder months set in and businesses brace for the holiday season, some regions are charging ahead while others hesitate, waiting to see how economic conditions unfold.

Few Surprises at the Top

Texas, California, and Colorado continue to dominate, proving once again that varied economies fuel business growth. These states don’t rely on just one industry. Instead, tech, energy, and defense all play major roles, keeping their economies resilient and attractive to new businesses. Booming populations, strong talent pools, and cultural hubs make them magnets for entrepreneurs, while strategic advantages like ports, transportation networks, and access to federal contracts keep the momentum going. And don’t think the cold is slowing down northern states like Maine, Delaware, and North Dakota. They’re holding strong despite the incoming winter chill. Florida and Mississippi are also continuing to make waves this month, rebounding impressively after a rough hurricane season. In Florida especially, once again at the top of our list, businesses are likely racing to rebuild and get high-traffic areas ready for snowbirds and holiday travelers. But the standout this month is North Dakota, which shot up from the bottom to the top of the ranks. No longer content to sit on the sidelines, the state is doubling down on support for entrepreneurs, offering grants for immigrant integration and committing to infrastructure and accessibility improvements to keep business formation on the rise.

Declines in States with Shaky Housing Markets

We’re also seeing similar patterns repeat in the states that are coming in last. Utah, Michigan, and Alabama are each dealing with familiar hurdles like economic slowdowns and shaky housing markets. But this month, there are a few surprises. Vermont and Iowa both took sharp dives, with Iowa in particular seeing a steep drop after a stronger start earlier this year. As colder weather sets in, Iowa’s agricultural backbone faces threats from drought, bird flu, and seasonal slowdowns, possibly leading many would-be business owners to wait until spring. Vermont, meanwhile, is dealing with rising unemployment and ongoing struggles with statewide childcare availability, making it tougher for entrepreneurs to get new ventures off the ground. Kansas, New Mexico, and Arizona also saw declines, possibly still feeling the effects of prolonged droughts, which can put the brakes on business activity, especially in industries reliant on agriculture and transportation infrastructure.

Conclusion

All in all, November’s rankings reinforce a familiar trend: states with diverse, well-supported industries are holding their ground, while those who have fewer or threatened options are slipping. The key to long-term success lies in adaptability, whether that’s rebounding after natural disasters, investing in infrastructure, or fostering business-friendly policies. As inflation, labor concerns, and seasonal shifts continue to shape the rankings, the states that can strike a balance between stability and growth will be the ones leading the charge into the new year.