Minnesota's unexpected small business surge
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Small business formations in Minnesota are up 31% since the pandemic began, a good sign for a usually cautious state when it comes to entrepreneurship.
Details: In the 14 months following April of 2020, entrepreneurs created 70,192 new businesses in Minnesota, according to data from the U.S. Census Bureau.
- A similar period from the pre-pandemic year of 2019 would've given Minnesota 53,760 new businesses, said Steve Grove, commissioner of the state's Department of Employment and Economic Development.
Why it matters: Small business growth is the best way to add jobs to a local economy.
Zoom out: Small business formations are up across the country, hitting a record high in 2020, Axios' Felix Salmon writes.
- It's an unexpected pandemic trend but it comes amid a surging stock market and after trillions of dollars in new government spending.
Between the lines: Minnesota is a risk-averse state. We have one of the lowest rates of entrepreneurship in the country, but one of the highest rates of businesses survival.
- In other words, our entrepreneurs don't swing at a lot of pitches, but when we do we tend to hit home runs, as evidenced by Minnesota's 18 Fortune 500 companies.
- "Homegrown businesses are really part of the bread and butter of the state," Grove said. "I would bet that some of the companies that are started during this downturn will be our next Fortune 500 companies."
Of note: We don't know what types of businesses are being formed and how many we've have lost during the pandemic. It's a hard metric to track.
- But nationally, sectors with the most growth are e-commerce, logistics and even restaurants, according to an analysis by University of Maryland economist John Haltiwanger.
What's ahead: The new state budget extends Minnesota's $5 million angel tax credit, which Grove said helps our state "be assertive ... and encourage and incentivize people to start stuff and then give them the tools to succeed."