When Entrepreneur magazine released its rankings last month of how friendly cities and states are toward small businesses, which placed Iowa dead last and Des Moines 36th out of 55 mid-size cities, there was more head shaking than gasps of disbelief among small business leaders and entrepreneurs.

“We’ve been at or near the bottom forever and ever,” said Dave Brasher, state director of the National Federation of Independent Business. “The question really becomes why, and I’m not sure I’ve ever been able to figure that out. I’m at a loss to explain why because I don’t think we’re that different in terms of a business climate.”

But many, though still concerned about the rankings, are encouraged that new and developing programs at the state and local levels, new sources of funding and an improved support system for small business owners will encourage small business growth and success.

Iowa has traditionally touted its quality of life and low cost of doing business as incentives for businesses to relocate or expand into the state. Mike Draper discovered those attributes when he moved back to Central Iowa after living in Philadelphia, where he owned a T-shirt company.

In Des Moines, he said, “rent is eight times cheaper but the population isn’t eight times smaller.” In addition to opening a clothing store that is unusual to Central Iowans, he ended up in an environment that he said is supportive of the plight of the small business owner.

“There was more potential in Des Moines,” said Draper, a Van Meter native and co-owner of Smash, which opened Sept. 13 in the East Village. “And it’s easier to start a small business in Des Moines. There are things Entrepreneur magazine doesn’t factor in, like that people are excited about new stuff and excited anything.”

Greater Des Moines Partnership spokeswoman Susan Ramsey said while Des Moines is among the top one-third of mid-size cities with is ranking, it is capable of being more competitive, particularly in a digital age when geographic barriers have been all but eliminated.

Though Iowa and other Midwestern states are at a seemingly constant disadvantage due to a lack of venture capital funds, Mary Bontrager, the Partnership’s executive vice president for community development, suggests the tide may be turning, particularly with respect to technology ventures. In the past 18 months, four West Coast-based businesses have relocated or expanded into Greater Des Moines. She is encouraged that the success of those companies will attract other out-of-state companies.

Since its inception in 1988, Bontrager said the Venture Network of Iowa has had “tremendous success” in connecting start-up businesses to venture capital. The Partnership’s Buy Into the Circle was launched in February 2004 to create opportunities for small local businesses, and a business accelerator program was launched in June to encourage business growth and expansion in the “business innovation zone” of Central Iowa.

“I think we’re definitely making more efforts in building the stronger foundation and being able to move development along, to drive it and maybe not sit back and wait for it to happen,” Bontrager said of Des Moines’ efforts. “The business innovation zone will definitely drive those faster.”

But many fear that current economic development efforts, particularly at the state level, are less likely to benefit Iowa’s existing small businesses, favoring large corporations or out-of-state companies looking to relocate and benefit from state funding sources. Kathryn Dickel, co-founder of IowaTix.com and the Iowa Entrepreneur’s Coalition, called the rankings “par for the course” and further evidence of the preference given to big businesses.

“I think we really need to be cognizant of the fact that the resources need to be balanced between some of the big corporations and the small businesses,” Dickel said.

The IEC has developed a number of recommendations that could advance the efforts of entrepreneurs in the state, such as focusing on building rather than buying businesses and giving priority to Iowa-based businesses for state contracts, which Jim Goodman, president of Customer Ease and a board member for the Venture Network of Iowa, said is the biggest hurdle for small business owners to overcome. Additionally, he said, entrepreneurs have had access to money for innovations, but not for the purpose of commercializing and marketing those innovations.

“Anyone and their brother could develop a business plan and get money,” he said. “But it’s more important to be able to work with some of the accelerators or some of the other local or university support systems to help you make this a true business.”

Brasher of the Iowa NFIB said although Iowa’s “tax system and bureaucracy are the worst in the country,” government cannot be the whole problem nor the whole solution. He’s often frustrated by the lack of interest and participation on the part of small business owners and entrepreneurs throughout the state in efforts to advance their own interests.

“We talk about the Iowa work ethic, and I think people are willing to put in a day’s work for a day’s pay,” he said. “But I don’t know if that risk-taking mentality is there.”