Scottsdale's thriving business district highlights Arizona's potential for startups.
Arizona has slipped to 10th place in the 2025 Chief Executive Best & Worst States for Business, dropping six spots from last year. This decline highlights challenges in maintaining a competitive business environment as other states improve. Despite the overall slip, cities like Scottsdale continue to perform well for startups. However, Tucson faces significant challenges, ranking low in access to resources. Arizona’s mixed performance underscores a complex business landscape, revealing both opportunities and hurdles amid changing conditions.
Arizona has dropped six spots from last year’s ranking to land at No. 10 in the 2025 Chief Executive Best & Worst States for Business. This decline comes after a significant record of success in previous years, and it marks Arizona as one of only two states from last year’s top 10 to experience a fall in the rankings, alongside South Carolina, which is now placed at No. 13.
The rankings were compiled from a January survey that included over 650 CEOs from throughout the country. Arizona’s slide in the rankings is the second largest of any state this year, only surpassed by Delaware, which fell 10 positions to No. 25.
The Chief Executive magazine indicates that Arizona’s drop may relate to its prior successes. While the state has been recognized for its favorable business environment in recent years, maintaining such high rankings can be challenging as other states improve their offerings to attract businesses and entrepreneurs.
Despite the state’s overall decline in ranking, Greater Phoenix has shown strong performance in WalletHub’s latest analysis, being recognized as one of the best large U.S. cities to start a business. Specifically, cities within Arizona are faring relatively well, as Scottsdale is highlighted as the top city in Arizona for starting a business, ranked at No. 14. Other notable cities include Chandler at No. 17, Glendale at No. 18, Mesa at No. 20, Phoenix at No. 21, and Gilbert at No. 24, all landing within the top 25.
Tucson, however, faced challenges, ranking at No. 50 in the same WalletHub analysis. The city performs well in terms of business costs, ranking 10th nationally, but places 81st in access to resources, showcasing significant room for improvement.
Scottsdale’s strengths lie in its access to resources, ranking fifth nationally in that category, followed by a 12th place finish in overall business environment. However, it ranked 78th in business costs, indicating a potential barrier for some entrepreneurs. Phoenix, on the other hand, ranked 25th in business environment but struggled with business costs at 40th and access to resources at 52nd. Meanwhile, Tucson’s weak access to resources contrasts with its advantageous business costs, reflecting a mixed picture for the state regarding business environment.
There is also notable activity among smaller cities in Arizona. According to WalletHub, nearly two dozen small cities in Arizona are recognized among the best in the nation for starting a business. Prescott leads among small cities at No. 49, followed by Prescott Valley at No. 86, Flagstaff at No. 190, Florence at No. 196, and Buckeye at No. 212. The overall scores for these cities range from 54.36 to 50.5, indicating various growth potential.
St. George, Utah, tops the national list for small cities to start a business, with a commendable score of 64.61, indicating stiff competition for Arizona’s smaller cities.
In addition to the state ranking challenges, recent reports have shown a declining trend for Phoenix in broader national evaluations. The 2025 World’s Best Cities report placed Phoenix at No. 89, down from No. 76 in 2022 and reflecting a continuous decrease since its peak at No. 49 in 2020. This trend may raise concerns about the city’s business environment and overall livability moving forward.
In summary, Arizona’s business landscape is currently experiencing a complex mix of challenges and opportunities, with its overall ranking slipping while certain areas within the state, particularly cities like Scottsdale, continue to shine in business startup potential.
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