New Business Formation Research

Gathering information on new business formation in Minnesota hasn't been easy. Here is my research so far, based on data from the Minnesota Secretary of State's office, the Minnesota Department of Revenue, the U.S. Census Bureau and the Small Business Administration.

Filings with the Secretary of State (not sole proprietorships) -- 44,000 in 2006

Registrations with the MN Department of Revenue -- 39,000.

Census Bureau count of new business with at least one employee (most recent study was 2004) -- 15,167
SBA count of non-employer business with at least $1,000 in revenue (same study period as above) -- 12,353.

When it comes to counting business births, the method varies. The Census Bureau requires the presence of an employee (determined by the opening of an unemployment insurance account)
The SBA requires at least $1,000 in revenue.

Approximately 62.5% of new businesses that file with the Secretary of State become "real" by those standards.

Based on my breakdown of the zip codes of all the new business filings in 2006, approximately 75% were in the Seven-County Metro Area.

Using that to extrapolate from the statewide totals, approximately 11,375 new business were created in 2004 with at least one employee, and another 9,265 reported at least $1,000 in revenue.

As a market segment, assuming that each business spent at least $1,000 in setting up their business, people starting a new business in the Twin Cities will spend $20,640,000. If the average is $5,000, the spending would be closer to $103,200,000.

I went with $1,000 after reviewing very small business startup examples in the 2007 edition of Business Plan Pro.

This is about as close as I can get to describing as objectively as possible the impact of business startup spending.

NewBizMinn
(nfp)