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The core state of the New England region, Massachusetts currently dominates in the technological sector and is the second most innovative state in the nation after Washington. Mostly, it’s due to the young specialists contributing to the tech-driven industries.
The Bay State boasts the highest concentration of tech workers and innovative startups. Though far from Silicon Valley, it’s distinguished by a high rate of venture capital deals per capita and stands out for a high average income rate hitting above $73.000 a year.
The extensive talent pool, high earnings in the technology industry, and promising opportunities in tourism attract private entrepreneurs and make Massachusetts one of the best states to live in and transact business.
In a WalletHub study, it ranks the tenth best state to start up a small enterprise (SME) for a business-friendly environment and easy access to resources.
An interesting fact is that in 2021, Massachusetts’ GDP was $530.51billion showing an impressive 15% growth as compared to $498.58 billion in 2020 according to Statista data;
In 2022, the state GDP hit the $543.6 billion mark further maintaining consistent economic growth;
At a 2.5% annualized GDP growth rate, the MA takes 30th place among 50 states under the recent IBISWorld survey;
Industries with the highest revenue are drug, cosmetic, and toiletry wholesaling, life insurance, and colleges and universities which generated $68.6, $66.7, and $57.5 billion in 2022 accordingly;
The biggest GDP contributors in 2022 are professional, scientific, and technical services, real estate, and manufacturing sectors generating around 42% of the total GDP;
In 2021, the state engaged $22 billion in venture capital investment, with only New York and California ahead;
MA exports totaled $23.6 billion in 2020 (US Census Bureau) and SMEs ensured an $8 billion share which is 33.8% of the entire export;
All in all, small private companies account for 88% of the state exporters;
MA is home to 718.467 small enterprises comprising 99.5% of all businesses in the state;
The biggest number of SMEs operate in the professional, scientific, and technical services sector, with 124.312 private entities in it;
The smallest number of smaller companies is observed in the mining, quarrying, and oil and gas industry, with only 119 companies in it;
According to BLS, for the period from March 2020 to March 2021, a net gain of new SME establishments in the state was 5.000 companies;
Despite that, a net job loss in the sector for the same period was 129.151 jobs;
Small enterprises in MA give jobs to 1.5 million residents ensuring 45.4% of the internal employment market;
Healthcare & social assistance and accommodation & food services are the industries with the highest employee numbers: 233.527 and 214.069 hired workers respectively;
Only around 18% of SMEs have employees on payrolls, and most of them are companies with 1 to 19 workers;
The minimum hourly wage rate across the state is quite high at $14.25 confidently outcompeting big US economies. Yet, it’s valid for non-tipped employees. While the rates for tipped workers start from $6.15 per hour;
The unemployment rate in MA in 2022 is only slightly higher than the federal minimum at 3.9%.
MA Small Business Challenges
Hospitality and tourism suffered from the COVID-19 pandemic the most. The number of active entities in these sectors decreased by nearly 55%, and they lost over 64% in revenues;
Following the MPG research, in 2022, 53% of SME owners still claim they have lower revenues than their pre-pandemic earnings;
74% of private entrepreneurs mentioned rising costs due to inflation as their major problem;
61% of businessmen consider salaries staying in line with inflation as their main concern;
Over 80% of business owners belonging to racial minorities specify that they have funding problems.
Top 10 Industries for Small Business in MA
Professional, scientific, and technical services
Transportation and warehousing
Real estate, rental, and leasing
Other services (excluding public administration)
Healthcare and social services
Administrative, support, and waste management
Entertainment and recreation
MA Small Business Demographics
According to a 24/7 Wall St. report, 44.5% of adults older than 25 years have a Bachelor's degree;
Women control 249.200 SMEs which make up 40% of the total small enterprise count in the state, and only about 10% of them are employer firms;
Male-owned SMEs account for as many as 414.304 companies, with 22% having employee payrolls;
25.343 SMEs are owned by men and women together, and 60% of those firms are employer businesses;
Ladies represent 49.2% of the labor force in MA;
Veteran-owned SMEs comprise 5.2% of the total small business number and veterans ensure 3.4% of manpower in the state;
Racial minorities own over 20% of SMEs in MA and maintain 30.6% of the labor force;
Three main ethnic SME owner groups are:
Black Americans: 44.052.
MA Small Business Formation
To open an LLC in Massachusetts, it’s enough to file formation documents with the state and pay a filing fee. Notably, the state has the highest formation fee in the nation at $500;
To register a corporation in MA will cost you $275 per 275.000 shares plus $100 for each next 100.000 shares;