The landscape of American entrepreneurship is experiencing a remarkable surge, characterized by substantial growth and generational shifts that are paving the way for new ventures. According to the Treasury Department, an impressive 430,000 new businesses were established each month in 2024, marking a 50% increase compared to figures from 2019. This entrepreneurial boom is largely fueled by the rise of remote work, the gig economy, and advancements in artificial intelligence, leading to the emergence of vibrant entrepreneurial hubs across the country.
In its annual report on the Best and Worst States for Entrepreneurs in 2025, Simplify LLC utilized the latest data from various reputable sources, including the Census Bureau, Bureau of Economic Analysis, Tax Foundation, and the United States Senate. The rankings evaluated all 50 states along with the District of Columbia, focusing on five critical factors: corporate tax rates, inflation levels, growth in consumer spending, job creation rates, and the net migration of educated individuals.
Tennessee found itself ranked at No. 39, a notable decline of 21 positions from the previous year. This drop can be attributed to a significant downturn in new business formation, which plummeted from a growth rate of 14.4% to a negative 10.8%, placing the state at No. 38 in that category. While consumer spending showed a slight improvement, rising from 1.6% to 2%, Tennessee still ranked No. 29 overall in this area. On a more positive note, the state maintained a favorable environment for worker mobility, with a net influx of 8,693 educated adults, securing the No. 9 spot in this metric, although this figure was a decrease from the previous year’s influx of 22,507.
Additionally, Tennessee faced a significant spike in regional inflation, which soared by 22%, resulting in a ranking of No. 31. This inflationary pressure further contributed to the state’s overall decline in its entrepreneurial ranking, highlighting the complex challenges that entrepreneurs in Tennessee are currently navigating.