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How to start a business in Minnesota in 7 steps

how to start a business in minnesota

If you’re looking to start a business in Minnesota, then you have many success stories to look at for inspiration. Some of the biggest companies in the United States—like Best Buy, Target and General Mills—are headquartered in Minnesota. The North Star State isn’t just home to goliaths, either. In fact, small businesses make up 99.5% of all businesses located in the state.

As exciting as Minnesota’s diverse business economy and business cycle is, starting a business can be an overwhelming process. You’ll want to make sure you have all your ducks in a row before jumping in. Luckily, we’ve created a step-by-step guide to help you navigate the waters.

Start a business in Minnesota in 7 steps

01. Come up with a solid business idea

The first step of starting a business in Minnesota, or any state for that matter, is to come up with a great business idea. Hone in on the overlap between your strengths and any holes in the market to find your ideal venture. Given that Minnesota is known for its diversity of industries, it can provide opportunities for a wide range of unique business ideas. We’ve put together a few examples to help you out:

  • Healthcare: Minnesota has a booming healthcare industry, which includes Mayo Clinic and UnitedHealth Group. Its proximity to these giants, combined with Minnesota’s growing aging population, provides ample opportunities for healthcare-related businesses, such as starting a home healthcare business, assisted living facilities and telemedicine.

  • Technology: Minnesota has a strong technology sector, particularly in areas such as software development, medical device manufacturing and renewable energy. Starting a business in these areas could be a good opportunity.

  • Food and beverage: Minnesota is known for its strong agricultural sector, providing opportunities for food-related business ideas, such as farm-to-table restaurants, food trucks, bakery businesses and specialty food stores. Learn more about how to start a food business.

  • Tourism and recreation: Minnesota is home to many attractions. Think: Boundary Waters Canoe Area Wilderness, the North Shore of Lake Superior and the Mall of America. Businesses that cater to tourists—like tour companies, outdoor equipment rental businesses and hotels—have ample opportunity to grab a piece of the pie.

  • eCommerce: Minnesota has a growing eCommerce sector, providing opportunities for businesses that sell products or services online. If this area interests you, consider creating an eCommerce website or selling on an online marketplace.

  • Environmental services: With a strong focus on sustainability and environmental protection, businesses that offer services like energy efficiency consulting, waste management or recycling could gain traction in Minnesota.

  • Tow truck services: Interestingly enough, Minnesota is reportedly one of the best states to work as a tow truck driver, with consideration to job availability and median salary. In the same vein, Minnesota may be a good state to start a tow truck business. Learn how to create a tow truck business plan to get started.

how to start a business in minnesota - choose a business idea

Hopefully, these industry ideas got your wheels turning. As you continue to explore, keep in mind that the best business idea for you will depend on your skills, interests and the market demand in your area.

Some other ideas include:

02. Choose your ideal business type

Once you’ve landed on a business idea, you’ll want to choose the best type of business model to support its growth. Don’t know where to start? Take a look at some of the most popular options:

  • Franchise business model: Franchising allows you to start a business using an established brand and a proven business model so you don’t have to take a gamble on a completely novel idea. With this option, you’ll also benefit from ongoing support from the franchisor.

  • Online business model: Opportunities are endless online, whether you choose to sell products, offer online services or list digital products for sale. This growing industry offers a lot of flexibility—so you can easily keep things small or scale to the heavens.

  • Service-based business model: Minnesota’s population has been rapidly growing since the mid-1940s and shows no signs of stopping. With this constant influx of people, service-based industries are in higher demand than ever. This can include any type of small medium business like a beauty business, cleaning services and professional coaches.

  • Home-based business model: Many small business owners are starting home-based businesses to cut expenses and increase flexibility. With the ever-increasing ubiquity of video conferencing platforms, you can run a business with a relatively high net profit without ever leaving home.

  • Social enterprise business model: Focus on solving an environmental or social problem while generating income. Examples in this space include sustainable fashion brands or nonprofits that run a for-profit business to fund their mission.

  • Cooperative business model: Cooperatives are user-led businesses that operate under a shared ownership model. This can be particularly effective in rural areas where you lack access to certain goods and services, as members will pool their resources.

03. Select the best name for your business in Minnesota

Your business name is often the first impression people will have of your business and can either be an invitation or a deterrent for prospective customers. As you embark on this process, we’ve gathered some tools for you to use along the way. Check out Wix’s free business name generator to get the creative juices flowing and refer to our tips below to choose something that works for you:

  • Incorporate location or Minnesota-specific references: Minnesota itself is a great source of inspiration for business names. Try using a reference to the city or town you’re located in, a local inside joke or anything else that makes your sliver of Minnesota unique.

  • Use a play on words: Consider a clever play on words that relates to your business, such as "Minne-soda" for a soda shop or "Minne-brew" for a craft beer business.

  • Use a reference to nature: Minnesota is known for its natural beauty, outdoor recreation and 11,000+ lakes—so using a reference to nature in your business name is a great choice. Look into names like "Boundary Waters Outfitters" for an outdoor gear store or "Lake Superior Soaps" for a handmade soap business.

  • Personalize it: People love a personal connection to you and your story. Think about using your name or initials in the business name, such as "Lana's BBQ" or "Smith Brothers Bakery.”

  • Keep it simple: A simple and easy-to-remember business name is often more effective than a complex one. No matter how clever or meaningful your name is, if people can’t remember it, it’s not doing its job.

  • Be creative and unique: It goes without saying that you should avoid naming your business too closely after a competitor or another brand. This will make things much less confusing and allow you to stand out from the fray.

  • Check availability and trademarks: Before finalizing your business name, it's essential to check that your desired name is available for use and not infringing on any existing trademarks. You can check availability on the United States Patent and Trademark Office (USPTO) website, as well as the Minnesota Secretary of State, where you can register your business name.

04. Create your business plan

When writing the business plan for your venture, you’ll want to map out your foundational framework as well as strategies for managing your business once it’s off the ground. Make sure to include an executive summary, a concept statement, operating expenses, funding plans and capital commitment, management and hiring best practices and your marketing strategy. If you’re feeling overwhelmed, just take it one section at a time. Remember, your business plan is a living document with the capacity to grow and change with your business.

how to start a business in minnesota - business plan

05. License and register your business in Minnesota

You’re almost there, but before you kick back and pop a pop, you’ll need to officially register and license your business in Minnesota.

  • Choose your business structure: Decide which type of business entity you want to form. This will determine your liability, tax obligations, management and more. Common business structures include sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Learn how to start an LLC.

  • Obtain an employee identification number (EIN): Register for an EIN online with the IRS. An EIN is used for tax purposes, as well as for opening a business bank account or hiring employees (among other purposes).

  • Register for taxes: If you’re selling taxable goods or services, you’ll need to register your business with the Minnesota Department of Revenue to receive a sales tax permit.

  • Obtain any necessary licenses and permits: The type of business you’re starting will determine the specific licenses and permits from the state, county and/or city that you’ll need to get. For example, if you’re starting a restaurant, you’ll need a food service permit from the Minnesota Department of Health.

Check your state and local agencies for the most up-to-date information, as requirements may change. You can also consider working with an expert third party to get get your business registered, such as Legal Zoom.

how to register a business in minnesota

06. Get funding for your business

When it comes to raising capital for your business, there are countless ways to achieve your goals. You can find business funding options through various Minnesota agencies and programs. Here are some resources to get you started:

  • Small Business Administration (SBA) loans: Take advantage of one of Minnesota’s several SBA offices that provide various loan programs to help small businesses with financing.

  • Minnesota Department of Employment and Economic Development (DEED): DEED offers various funding programs for businesses, including the Minnesota Investment Fund, which provides financial backing to businesses that create jobs in Minnesota.

  • Minnesota Small Business Development Center (SBDC): The SBDC provides training and counseling to small business owners and can help them access funding through SBA loans and other programs.

  • Community Development Financial Institutions Fund (CDFI): The CDFI Fund invests federal dollars alongside private sector capital into businesses in economically disadvantaged communities.

  • Crowdfunding: Raise capital through crowdfunding platforms including GoFundMe, Kickstarter and Indiegogo.

Note: each program has different criteria, requirements and application processes. You’ll want to check with the appropriate state and local agencies or consult a business attorney to understand all of your options in greater detail.

07. Create a business website

Building a business website is essential for amplifying your reach and building up your brand’s credibility. With a thoughtfully designed website, you can put your best foot forward, plus control the messaging around your brand.

Making a website doesn’t have to take a long time either. You can find tons of business website templates that are specifically crafted for your industry. Customize the look and feel of your site however way you’d like—just make sure to keep your branding consistent across all of your online properties.

start a business in minnesota - business website

Business examples in Minnesota

Check out these Minnesota-based business websites built on Wix.

XIA Gallery & Café

XIA Gallery & Café is located on University Avenue in West St. Paul, Minnesota. It’s a coffee shop and exhibition space showcasing the work of Asian American artists and makers. It’s in the historic Little Mekong cultural and business district, which emerged in the 1980s and 90s when Southeast Asian Vietnam War refugees were placed in St Paul.

Doughing Crazy

Nikki, owner and baker at Doughing Crazy, whips up an impressive assortment of sourdough baked goods (if you'd like to start a bakery, check out how to start a baking business and how to create a bakery business plan). She uses clean ingredients in all of her products—including breads, bagels, pretzel buns, regular hamburger buns, croissants, muffins and more.

Luxe Events

Luxe Events is an event company and rental space in the heart of Perham, Minnesota. The space has capacity for 88 people and can be customized for a variety of special events including wedding showers, family gatherings, photo shoots, corporate meetings, small performances and private parties.

Schiller’s House

Katie Schiller launched Schiller’s House with “a vision to provide the manliest and best place for dudes to get groomed in the Lakes Area.” With 20 years of experience in the industry, Schiller and her team provides edgy haircuts for men of all ages.

How to start a business in Minnesota review

start a business in minnesota review

Looking to start a business in another state or find the best states to start a business? Check out:

How to start a business in Minnesota FAQ

How much does it cost to start a business in Minnesota?

The cost will depend on what type of legal business entity you wish to register, and how you do it. To open an LLC, for example, it will cost $135 by mail, or $155 online/in person. The prices are slightly higher again if you're a foreign corporation registering a business in the state.

Is Minnesota a good place to start a business?

How to start a business in Minnesota online?

How to start a Minnesota business from home?

How long does it take to start a business in Minnesota?

It depends on the type of business entity started,

Sole proprietorships and partnerships: These can be started relatively quickly, often within a few days, especially if no special permits are required.

Limited Liability Companies (LLC) and Corporations: The processing time for filing necessary documents with the Minnesota Secretary of State can typically take a few days to a couple of weeks.

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