Minnesota Small Business Statistics (2022)

Minnesota is a good place to establish a business. According to an annual CNBC “Top States for Business” survey, the Land of 10,000 Lakes is ranked as the seventh best state in the US for business.

The CNBC survey ranks each state based on qualities considered advantageous for luring business, including technology, where Minnesota scored an A-, access to capital (B), technology and innovation (A), education (A), and infrastructure (B).

With an annual gross domestic product (GDP) of $379,388,000, the Gopher State boasts the 17th best GDP in the US, and small businesses play a major role in propping up these figures. 

Here are a few Minnesota small business statistics that shed light on their impact on the state’s economy.

Quick Minnesota Small Business Statistics for Entrepreneurs

  • Small businesses account for 99.5% of all Minnesota private enterprises.
  • 46.2% of Minnesota employees work for small businesses.
  • Military veterans make up 4.1% of workers and own 7.1% of businesses.
  • Racial minorities own 9.6% of small businesses.
  • Women account for 41% of small business ownership.
  • The per capita disposable income in Minnesota is $57,515 and the per capita consumption expenditure is $47,434.
  • Between 1994 and 2018, Minnesota small business employment grew by 15.6%.
  • Small businesses exported goods worth $5 billion in 2019.
  • Between March 2019 and March 2020, 13,797 Minnesota establishments opened and 12,740 closed, for a net increase of 1,057.
  • Minnesota’s business survival rate is 55.3% compared to the national rate of 50%.

Minnesota Small Business Statistics

1. What is considered a small business in Michigan?

The Small Business Administration (SBA) defines a small business according to company size, that is, by firm revenue (ranging from $1 million to over $40 million) and employment (from 100 to over 1,500 employees).

For example, according to the SBA definition, a plumbing contractor is defined as a small business if it has annual revenues of $16.5 million or less. But a chocolate factory is defined as a small business if it has fewer than 750 employees.

2. How many people are employed by small businesses in Minnesota?

There are 1.3 million small business employees in Minnesota who make up 46.2% of all employees in the state. On January 1, 2022, Minnesota’s minimum wage rates were increased for inflation to $10.33 per hour for big companies and $8.42 per hour for other state minimum wages.

The previous large-employer minimum wage of $10.08 was raised by 25 cents to $10.33. Other state minimum wages, such as the small-employer, youth, and training wages, as well as the summer work travel exchange visitor program wage, were raised by 21 cents to $8.42. Both of these increases are 2.5%.

3. Minnesota small business statistics by industry

The professional, scientific, and technical services sectors have the largest number of small businesses operating in them compared with other industries in Minnesota, for a total of 78,475. Approximately 63,251 of these businesses are nonemployer businesses, 14,138 have 1–19 employees, and another 1,086 have 20–499 employees on payroll.

The mining, quarrying, and oil and gas extraction sectors have the least number of small businesses operating in them.

4. Minnesota small business ownership by ethnicity

Minnesota has a population of 5,707,390 people and has had yearly population growth of 0.7% over the last five years, placing it 17th out of the 50 US states. White/Caucasian Americans are the majority, representing 83.8%. Black/African Americans are the second largest group at 7%, followed by Hispanic/Latino Americans (5.6%), Asian Americans (5.2%), American Indians and Alaska Natives (1.4%), and Native Hawaiian and other Pacific Islanders (0.1%).

The data below show how small business ownership is distributed among these ethnic groups:

  • White/Caucasian — 460,971
  • Black/African American — 27,901
  • Hispanic/Latino — 11,995
  • American Indian and Alaska Native —- 1,494
  • Native Hawaiian and other Pacific Islander — 150

5. Minnesota small business ownership by gender

There are 181,984 women-owned small enterprises in Minnesota. Approximately 162,000 of these firms are nonemployer businesses and 19,984 have employees on their payrolls. Men own 300,609 small businesses, 231,000 of these have no employees and 69,609 have employees. There are, however, 27,404 small enterprises in Minnesota that are owned by both men and women.

6. Business taxes in Minnesota

The state considers standard limited liability companies (LLCs), partnerships, and sole proprietorships to be pass-through organizations. This indicates that revenue from a Minnesota LLC is distributed to the LLC members, and each individual member is taxed on his or her portion of the company’s profits. However, you might choose to have your LLC classified as a corporation. The LLC would thereafter be liable to Minnesota’s corporate franchise tax.

The top corporate income tax rate in Minnesota is 9.8% and the state ranks 45th in the Tax Foundation’s state business tax climate index ranking.

It’s highly important as a small business owner that you stay in compliance with Minnesota’s state taxes. Failure to do so will land your business in serious legal trouble. Luckily, you can hire a registered agent who will not only assist you with the business formation process but will also help you with your tax compliance issues by sending constant notifications to remind you of impending filing deadlines, and, in some cases, even assisting in the tax filing process.

Read my full review of the best registered agents in Minnesota to find out which agent is good for your business.

7. Small business financing in Minnesota

Large banks must report any new loans they provide to small businesses, according to aggregate statistics given by the Community Reinvestment Act (CRA). In 2019, reporting banks paid out $1.4 billion in loans to Minnesota firms with less than $1 million in sales. Total reported new lending to firms through loans of $100,000 or less was $1.6 billion, while total reported new lending to businesses with loans of $1 million or less was $4 billion.

8. How COVID-19 affected small businesses in Minnesota

Minnesota has the 36th highest economic exposure to COVID-19 of all states in the US, based on the percentage of employees working in industries with a high or medium-high degree of exposure to COVID-19.

In Minnesota, 47% of all employees, or 1,524,735 people, work in industries with a high or medium-high degree of economic exposure to COVID-19. Also, 14% of all employees, or 451,600 people, work in industries with a low or medium-low degree of economic exposure to COVID-19. 

9. Minnesota small business export statistics

The US Census Bureau’s profile on importing and exporting companies reports that a total of 8,469 recognized firms exported goods worth $20.7 billion from Minnesota in 2019. Of those exporters, 7,268—or 85.8%—were small. Small firms exported goods

worth $5 billion, making up 23.9% of exports by identified firms.

10. Advantages of establishing a business in Minnesota

Here are three main reasons why Minnesota is the best state to establish your business:

  • Quality of life: According to the 2019 Forbes “Best States for Business,” Minnesota is ranked #3 in the quality of life. The typical household income in Minnesota is $71,306. A whopping 93% of the adult population possesses a high school diploma and the percentage of people who have completed college is 34.7%. The people of Minnesota are well educated and contribute immensely to the economy. Despite the fact that the cost of doing business is 3% higher than the national average, it is a desirable populace to do business with. They have good financial potential, which means they can spend their money on your business.
  • Minnesota’s Twin Cities: Minneapolis and St. Paul are the two major cities in Minnesota’s Minneapolis-St. Paul metropolitan area. They are twins because they are both huge and located in the same geographical area. Running a business in the Twin Cities provides a unique environment for entrepreneurs. The area is home to 64% of the state’s population and serves as the state’s economic engine.
  • Jobs growth: Several unique locations of Minnesota have been identified as having steady job growth since 2016. The Twin Cities is one of those locations, with a 1.4% increase. That is the same as the country’s total job increase in 2016. The St. Cloud region had a 2.3% growth. There are several prospects for expansion for many different types of enterprises. 

Getting started in business is a very exciting endeavor. However, the paperwork involved during the start-up process can be quite overwhelming. You should consider hiring the services of an LLC formation service that will take care of the legal aspect of business formation and leave you to concentrate on more important business activities. 

Read my review of the best LLC services in Minnesota and find out which firm offers the best formation services for your business.

The Final Word

For a variety of reasons, the Land of 10,000 Lakes is an excellent place to begin your business career. A significant element is the abundance of business assistance available to both start-ups and existing enterprises. Minnesota has plentiful free development centers, sources of business advice, and professional small business assistance systems tailored to help entrepreneurs get a footing in the business world.


Small Business Statistics By State


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