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Oregon receives ‘B’ for small business friendliness

Statesman Journal

The verdict is in, and small businesses give Oregon a B for business friendliness, according to Thumbtack.com’s annual Small Business Friendliness Survey. Friendliness, of course, not about how nice the state is to its citizens, but how friendly Oregon’s governmental policies are to its small business community.

About 18,000 small businesses owners participated in the survey, which rates state and city governments on a range of business policy issues. Thumbtack.com used that information and 12 other metrics to evaluate states and cities against each other.

The B grade is the highest Oregon has received in the survey’s four-year history, marking an improvement over the state’s 2014 C plus grade.

Oregon ranked 18th nationally out of the 36 states surveyed, ahead of Washington, which finished 26th, but behind Idaho, which ranked 6th. California ranked 33rd, ahead of only Connecticut, Illinois, and Rhode Island.

Salem business owners surveyed in the survey, who were not identified, voiced criticisms of Oregon’s business policies. The criticisms ranged from the state being too regulated to the cost of state training and testing programs.

The criticism from small businesses doesn’t seem to have had an effect on Oregon’s ability to draw in new businesses.

New reports show significant growth in new businesses in Oregon.

According to the U.S. Department of Labor and Wells Fargo, there were 3,116 new businesses in Oregon in 2014, which was a 13.8 percent change over the previous year.

And Oregon’s economy grew 3.6 percent in 2014, which outpaced the U.S. real GDP growth of 2.2 percent.

Jon Lieber, chief economist of Thumbtack.com, praised the strong improvement in Oregon’s networking and training programs as a potential factor in the higher 2015 grade. The state scored an A-plus on such programs for business owners, up from the B the state scored in 2014 in the same category.

Lieber said some of the complaints Oregon small business owners had about the state’s policies included too many governmental regulations that are often opaque and hard to follow, along with the cost of hiring new workers.

“Small business owners on Thumbtack have consistently told us that they welcome support from their government but are frequently frustrated by unnecessary bureaucratic obstacles,” said Lieber. “Given that there is a crisis of entrepreneurship in the United States, seen in the broad collapse of self-employment across industries and states, creating the right environment for business start-ups is more important than ever.”

Al Tandy, owner of the Salem Summit Company, an outdoor equipment store, disagreed with his fellow Salem business owners and spoke highly of Oregon’s small business policies.

“The process was very straightforward and easy…The only real difficulty is figuring out what steps need to be taken, but the State of Oregon provided me with great resources on their webpage,” Tandy said. “I would have rated Oregon an A in every category.”

Kyle Plaisted, owner of KP’s Harvest Time Products, whose company just recently opened a small manufacturing shop in Mt. Angel, also gave Oregon high marks for its business policies. However he did have one category where the state could improve.

“The category Oregon could improve on to become a better state for a small business is the tax category. If small business entrepreneurs did not have to pay state or federal income tax for the first five years of business, they could roll their profits back into their company,” he said. “This would allow them to be able to hire more people and buy innovative equipment therefore becoming efficient and sustainable while remaining profitable.”

Other Key Findings for Oregon

The worst score Oregon received was a D for the ease of hiring new employees at a business. The D was a downgrade from a D plus the state received in 2014.

Portland improved with B in overall business friendliness, up from a B minus in 2014.

The better grade can be attributed to improved grades in 2015 including employment, labor and hiring, environmental, and zoning and land use regulations.

The worst scores for Portland were for ease of hiring and labor regulations – earning a C minus grade in both categories.

Q&A with Jon Lieber, Thumbtack.com chief economist

In this Q&A Jon Lieber, Thumbtack.com chief economist discussed the things Oregon can do to improve its grade next year, where the state ranked in relation to their west coast neighbor states, and how the state should feel about its small business friendliness.

Q. What are some things Oregon can do next year to improve its overall grade next year?

A. Oregon did worst when it came to ease of hiring new workers and friendliness of labor laws. This suggests a possible area of focus for lawmakers might be factors that make it easier to find and bring on board new, qualified workers.

Q. When looking at the rankings of the states in the Pacific Northwest, where does Oregon rank? What was the best PNW state for small businesses?

A. Washington ranked No. 26 out of 36 states we ranked, with a C plus for business friendliness. Idaho was the highest-scoring state, receiving an A overall and ranking No. 6 of the states we looked at.

Q. Are there policies or lessons related to small businesses Oregon could learn from other Pacific Northwest states?

A. Both Oregon and Idaho earned A+ grades for training & networking programs, but only Idaho received A’s for its tax and labor regulations. Idaho residents also found it somewhat easier to start a business than did Oregonians, all factors that weigh heavily in the minds of the small businesses that we survey.

Q. What’s the biggest thing Oregon residents, government officials, business owners, etc. should take away from the survey this year?

A. Oregonians feel positively about their government and the support they receive locally as entrepreneurs, but there is lots of room for improvement in the regulatory climate. Original comments from Oregon business owners that may point the way toward reform can be found at https://thumbtack.com/or/

Check out the full survey here. https://thumbtack.com/blog/2015-results/

bsouthward@StatesmanJournal.com, (503) 399-6709 or follow on Twitter @B_Southward