More and more we have been hearing that entrepreneurship is the main engine for driving our economy on a large scale. But how important is entrepreneurship to Minnesota’s economy? We all know the large Minnesota companies that help drive Minnesota’s economy: Target, Carlson, Cargill, 3M, Best Buy, Etc… But are these companies really the stronghold of Minnesota’s economy?
According to the 2009 census statistics, there are around a total of 117,023 registered businesses in Minnesota ranging from 1 employee to 2,500 or more. So let’s dive into these totals a bit deeper. The businesses we can all name as Minnesota companies- some mentioned above-- are considered big businesses, having a workforce of 500 or more. Of the 117,023 total businesses registered in Minnesota (2009 Census) around 15% of them would be considered big businesses. The census also shows that businesses considered to be small or entrepreneurial by nature, make up nearly all of Minnesota’s businesses at 85%.
85% of Minnesota’s businesses does not mean 85% of Minnesota’s business earnings, but considering that the larger businesses only make up 15% of Minnesota grown profits you can see the statistical importance of small/entrepreneurial businesses in Minnesota.
-statistics can be found in US Census Data
Growth, but from where?
Big businesses make up around 51% of Minnesota’s employment figures. The proportion of businesses to employment is pretty lopsided looking at small vs. big business employment figures. So where do we look to encourage growth? The first question that should be asked when considering this is, what is considered growth? More profits, more employment, or just more businesses in general?
Many have been looking at employment as a key to the economy . The more people earning means more people spending take on the economy. This being said, many would consider driving more employment as factor one. Since Minnesota’s big businesses hold about 50% of Minnesota’s workforce and have large profits, many look to them for growth. But typically big businesses have a workforce that is already at its sustainable max and as we all know it is harder to move a big mass then it is to move a small one- think boulder versus pebbles.
There has been a big push to encourage Minnesota entrepreneurs. Making up over 85% of the state’s businesses and close to 50% of the workforce, it is clear that there is a need for entrepreneurs and small businesses for economic growth. It can be much easier and less costly to start many smaller businesses then it is to put capital towards bigger businesses, think of the boulder vs. pebble analogy again.
However, we cannot just put money towards growing small businesses. It is important for small businesses to receive fostering, and tools to grow. New programs like PROSPER- see this article, and offering incubator programs for businesses in Minnesota is important. This type of business creation is, in a large part, what grew Silicon Valley into what it is today. These programs aren’t just limited to business incubators, colleges, and investors. Not for profit programs are becoming important at well. Take a look at Anoka County Library system’s Small business classes for an example.
With a solid foundation of large businesses for profit and employment like Target, 3M, Cargill, etc… to support our state it is becoming more and more important to encourage small businesses. Our main growth area in the next few years will be small business. The statistics point towards this fact. It is not just a political slogan, small businesses are a driving force in our economy.