Study finds state business climate rankings not consistent

It's no secret that individuals who run the city of Chicago and state of Illinois are doing what they can to make the locations appealing to businesses of all sizes and at various stages in development. They are not the only areas in the nation doing this. In an effort to make it easier for businesses to decide the best location various organizations create rankings regarding the business climates of various states. One of the things taken into consideration is each state's business tax situation.

A recent study indicates that those rankings may not be as informative as first thought. This is good news for the state of Illinois that, depending on the ranking report, has appeared as high as fifth and as low as 45th. Issued by a nonprofit called Good Jobs First, the report took a look at rankings as far back as 1975.

Good Jobs First's report essentially found that because each business is so different, a "one size fits all" approach does not work. In addition, each report weights elements differently. For example, it determined that some reports lean too much on state business taxes but fail to provide a complete picture with all of the relevant information.

What this means then is that is it important for start-up businesses, as well as businesses that have been in existence for a while, to gather the information that is relevant to the business and make decisions regarding how and where the business will be run, on that information. Relying too heavily upon state business climate reports to make such a decision can adversely impact a business.

Source: Crain's Chicago Business, "Why state business climate rankings are bunk: study," Paul Merrion, May 1, 2013

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