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Home to 18 Fortune 500 companies, Minnesota is a state with a strong and diverse economy. It was initially built around agriculture, and this industry still holds the leading position, with the state featuring the fourth-highest agrarian profit in the nation.
At the same time, manufacturing, mining, and energy production play an important role, and service sectors get up steam to further diversify the economic landscape.
The Land of a Thousand Lakes ranks 9th in a “Top States for Business” CNBC rating for 2022. The categories where Minnesota excels and gets the highest marks are life and health, technology and innovation, education, and infrastructure.
Despite welcoming big national players onboard such as Target, 3M, and Carlson Companies headquarters, the Gopher State’s economy owes its economic strength and stability to small enterprises (SMEs) to a great extent. To attract and support private entrepreneurs, the state administration has a number of incentives in place.
In 2020, the gross domestic product of the Gopher State showed a 4% drop due to a heavy pandemic impact on the state’s economy;
For 2021, though, Statista reports the state’s GDP at $345.17 billion which is 3% higher than the 2020 result and about 2% higher than a pre-pandemic figure, thus, showing a steady economic recovery;
As such, the Minnesota GDP is the 17th in the nation showing a consistent 1.2% annualized growth rate within a 5-year period despite the temporary stagnation;
Based on IBISWorld data, the biggest value-adding sectors are manufacturing, real estate, and healthcare maintaining 38% of the total gross domestic product in the state;
Minnesota SMEs boast the highest 5-year survival rate in the nation, with over 55% of private companies outlasting a five-year period, which exceeds the federal average rate;
Under the Census Bureau stats, as of 2022, the state hosts 534.397 SMEs that make up 99.5% of all businesses in MN;
In 2020, small firms accounted for 86% of exporters and sold goods for $4.6 billion ensuring 24.2% of the state exports worth $19 billion;
While SMEs widely favor a professional, scientific, and technical service sector (with over 78.000 companies operating in it), the least popular industry among private firm owners in mining, quarrying, and oil and gas (266 SMEs);
From March 2020 to March 2021, a net gain of new establishments in the state was over 1800 small entities;
Despite a growing number of SMEs, a dramatic employment decrease in this sector resulted in a net loss of 72.473 jobs;
As of 2022, SMEs maintain an employee pool of 1.3 million workers ensuring employment for 46% of Minnesotians;
The leader among SME employers is the healthcare and social assistance sector with 217.320 workers on the payroll. It’s followed by accommodation and food services and manufacturing, with 150.666 and 133.945 employees accordingly;
Only about 22% out of all SMEs in the state have payrolls, and nearly 85% of employers are smaller firms hiring from 1 to 19 workers;
The minimum hourly wage rate in MN is $10.33 for bigger employers and $8.42 for other companies across the state;
An average hourly salary is $23.15 as of 2022;
The state has the third-lowest unemployment rate in the country at 2.4% against the federal minimum of 3.7%.
Top 10 Industries for Small Businesses in MN
Professional, scientific, and technical services
Real estate, rental, and leasing
Other services (excluding public administration)
Transportation and warehousing
Healthcare and social services
Administrative, support, and waste management
Entertainment and recreation
MN Small Business Demographics
Women possess 183.984 SMEs in the state accounting for 41.1% of the total count. According to US Census data, only 11% of female-owned private firms have workers;
Men-owned small businesses total 303.609 companies, with 23% of them having employees on their payrolls;
Around 28.000 entities are equally owned by both groups, and 60% of them are employer companies;
Female employees account for 47.9% of the private sector labor force;
Veteran-owned SMEs number 6.9% of smaller enterprises and represent 4.1% of employees in the state;
The immigrant pool represents 18.8% of the SME workforce and controls 12.7% of private companies, with three big ethnic groups:
Black Americans: 30.901;
MN Small Business Formation
To form an LLC in Minnesota, you should register the Articles of Organization with the state and pay a $135 fee if you file by mail or $155 when filing online;