Despite Minnesota’s poor tax climate, the state had a strong showing in a recent NerdWallet study that ranked the best 100 small cities for small business. Minnetonka ranked number five, Eden Prairie and Bloomington made the top 20, and Plymouth, Eagan and Duluth cracked the top 100.
The study reviewed 463 small cities with populations between 50,000 and 100,000 and took into consideration business revenue, percentage of businesses per 100 people, median annual income, median annual housing costs and unemployment rate.
However, the study didn’t take into account corporate, income, sales, and property tax, all of which are high in Minnesota, a state that ranks as one of the lowest for economic outlook. Minnesota’s small cities appear to maintain a successful business climate despite aggressive taxes and legislation.
“There are some very successful businesses in those cities,” says Mike Hickey, NFIB Minnesota state director. “They’re all good places to do business, they’re near the freeway.” Hickey also credits the state’s location for the success of its businesses. “It’s a regional center, and I think that’s the best explanation.”
The study found that opportunity was greatest in cities that boast an average median income that’s 24 percent higher than the national average of $43,880, are close to a major metro area, and invest in technology to support growing industries like clean energy, health tech, and defense and security.
Minnesota as a whole also enjoys a low unemployment rate, and “there’s a lot of entrepreneurial energy here,” says Hickey. The state boasts 17 Fortune 500 companies, and Minnetonka alone has 7,957 businesses that each make on average more than $2.9 million a year.
Minnesota’s tax climate and legislation still has a long way to go, but for now its small cities hold their own when it comes to business opportunity and entrepreneurship.