Minnesota’s Business Landscape: Navigating Challenges To Thrive

For years, we’ve heard how Minnesota isn’t business-friendly. That the Land of 10,000 Lakes is sometimes considered a challenging place for businesses.

But is that really true?

Minnesota’s business climate takes a hit for a number of reasons, including:

High taxes: The individual and corporate tax rates are among the highest in America;

Regulations: Minnesota’s regulatory environment can be challenging. Everything from manufacturing, healthcare and environmental services. Labor laws are also stricter than many other states.

High labor costs: An educated workforce, strong unions and cost of living all work to boost the cost of doing business here.

Cold climate: Minnesota’s harsh winters, weather-related shutdowns and energy costs can scare-off some businesses from starting up in Minnesota.

Urban vs. Greater Minnesota differences: There are several big, national companies headquartered in Minneapolis and St. Paul. Target, 3M, Best Buy, United Health Care. Not so much in Greater — or Outstate — Minnesota.

And yet, overall, Minnesota businesses are tied for #1 in a new study of the best states for new business according to US Bureau of Labor Statistics’ Business Employment Dynamics program data.

The business planning company Vena Solutions released their analysis of business longevity data, finding Minnesota businesses have some of the lowest rates of failure in the country.

The study finds 22.3% of Minnesota businesses fail after one year. 42.4% go out of business after 5 years. And 59.2% fail after 10 years in business.

Nationally, 23.2% of American businesses fail after one year, 48% after 5 years and 65.3% after 10 years.

Vena Solutions finds Minnesota’s low cost of living, pro-business state policies and stable economy are helping businesses to survive as they mature.

And Vena cites data that shows Minnesota is tied with Montana as states where businesses are most likely to thrive.

So which is it — is Minnesota a good place for new businesses or a bad place?