RUTHERFORD COUNTY, TN - A new study has revealed that Tennessee has fallen significantly in rankings for entrepreneurs, now placed at No. 39 in 2025, a stark decline from its 2024 position at No. 18. The latest report, released by Simplify LLC, analyzed various factors affecting entrepreneurial activity across the United States. Washington State now claims the top spot for entrepreneurs, with Texas following closely in second place.
The study highlights a broader trend in American entrepreneurship, which is witnessing remarkable growth and generational shifts. According to the Treasury Department, 430,000 new businesses opened each month last year, a 50% increase since 2019. Notably, a record 43% of these entrepreneurs are now female, and there has been a surge in SBA loans to minority business owners.
Despite the overall growth, certain regions, including Tennessee, are grappling with rising costs. Inflation in the Southeast has escalated, contributing to a 22% increase in everyday goods compared to 2021 prices, the highest rate in the nation. This economic strain could be impacting the entrepreneurial climate in the state.
The six categories analyzed in the study included corporate tax rates, new business growth, consumer spending growth, regional inflation, job creation rates, and the net migration of educated workers.
Tennessee's performance in different areas was mixed:
- Maximum corporate tax rate:** 6.5% (Rank: 27)
- New business growth:** -10.8% (Rank: 38)
- Consumer spending growth:** 2% (Rank: 29)
- Regional inflation:** 22% (Rank: 31)
- Job creation rate:** 15.75 (Rank: 27)
- Net migration of educated workers:** 8,693 (Rank: 9)
While Tennessee ranked 9th for net migration of educated workers, its new business growth rate showed a significant decline, contributing to the overall lower ranking.
The study also revealed that Alabama is now at the bottom of the list for 2025, dropping from 31st place last year. In contrast, Louisiana improved its standing, moving from last place in 2024 to 33rd in the current rankings.
As entrepreneurship evolves in America, Tennessee’s recent decline highlights the need for initiatives to bolster business growth and address economic challenges.
