Although it is not technically a state, the District of Columbia was ranked as the worst state for small business owners in terms of policy. Between its high crime rate and increasing taxes, D.C. is far from an ideal venue for start ups.
New Jersey was the second least-friendly policy environment according to the SBE Council index. The index ranks states by measuring the costs and burdens of government on small businesses, as well as policies that either enable or deter growth.
New Jersey's neighboring state, New York, came in third place in the index. The factors included in the index are: taxes, regulatory costs, government spending, property rights, health-care policies and energy costs, among others.
One of the country's largest states, California, was ranked as the fourth worst place for small businesses in terms of policy.
Vermont rounded out the bottom five states for small business owners in terms of policy environment.
The Small Business & Entrepreneurship Council's 2010 Survival Index ranked these states as the worst policy environments for small business owners.