As the U.S. economy expands more Americans are thinking of starting their own business. Oregon can be a great place to start a business, but also has some challenges they may make a potential entrepreneur think twice about opening shop in the state. Three things that make Oregon a great place for business are the following.

1. Highly educated workforce. In the Portland area, almost half the adult population has a bachelor’s degree or higher. Across the U.S., less than one-third of adults have college degree. Oregon’s growing population is a rich source for customers and clients.

2. Strong start-up community. Oregon’s pioneer spirit extends to its DIY culture and a sense of energy to create an independent business. Just Google, “Oregon startup community,” and you’ll find pages of meetups, resources, and groups.

3. Preference for small businesses in government contracting. Oregon’s Emerging Small Business certification program gives preference to young small businesses in a variety of government contract opportunities—including a large number of municipal contracts and city contracts.

On the other hand, here are three reasons to think twice about starting a business in the Beaver state. These reasons are offered to alert future start-ups of the future challenges ahead so they can be ready. These reasons are also offered to help reveal barriers so that policy makers can address the issues that are preventing more start-ups from being created in Oregon.

1. Lack of capital. Oregon is a great place to start a business, but a hard place to grow one. As a small state living in the shadows of Silicon Valley and Seattle, small but growing firms have a hard time finding the money to scale-up their businesses.

2. High taxes. Oregon has one of the highest rates of personal income taxes in the U.S. The state also has one of the highest capital gains tax rates, which is one reason successful small businesses move their headquarters as they grow larger. Oregon should do all it can to keep Oregon businesses in Oregon.

3. Anti-business climate. The state has costly regulations regarding the minimum wage, paid time off, and the use of contractors which are sometimes more expensive than other states and has shown to increase layoffs. The state’s land use laws (noted for being among the most restricted in the nation) pose a challenge in finding suitable space for larger operations, especially industrial sites.

Oregon is a great place to live and work, but every business is unique. In general, the state is a good place to start a small business, but difficult place to grow into a medium or large sized business. These things should be kept in mind as entrepreneurs consider starting a business in Oregon so they can be fully prepared and successful.