Maine ranks fourth among the seven worst states to start a small business, according to U.S. News, which determined the ranking based on the Small Business Survival Index produced by the Small Business and Entrepreneurship Council and the 2008 State New Economy Index.
Maine ranks second to Vermont in number of New England small businesses, according to Jim McConnon, a University of Maine economics professor. The number of Maine’s small businesses, however, is declining.
McConnon said nearly 4,500 New England small businesses began between 2005 and 2006 – a 5 percent increase – whereas Maine experienced a 3.1 percent decrease.
Todd Gabe, an economics professor at UMaine, said small businesses are vulnerable to economic fluctuations.
“Economic health really depends on how the small businesses do,” Gabe said, “but the impact is on the growth of the economy. The health of a business comes from its vibrancy and growth.”
Maine is set to succeed in the “new economy,” according to the 2008 State New Economy Index. Maine is ranked 12th for attracting knowledge workers, seventh for entrepreneurial activity, 14th for online population – with 74 percent of residents connected to the Web – and fifth for alternative energy use, according to the 2008 State New Economy Index.
Maine is ripe with small businesses. McConnon said 89 percent of Maine businesses employ fewer than 20 people. Fifty-seven percent of Maine companies are micro-businesses that employ one to four people.
“Looking comparatively at the U.S., whose small business population is around 18 percent, Maine is doing well,” McConnon said.
Maine has “a lot going for it” in terms of small business, according to McConnon.
“It is the economic health that influences a business, but it also depends on the capital of the business,” McConnon said. “With the decline in major industries, Maine is increasing its micro-business index. These are businesses such as specialty foods, cabinet makers, people in arts, education consultants, etc.”
At the Foster Student Innovation Center on campus, Jesse Moriarity and Renee Kelly are counselors who help students interested in starting a business and gives them tools to run it successfully.
“A hugely important part to keeping a business afloat is to keep it fresh – stay unique,” Kelly said. “Networking is a constant process. Business owners need to ask who their customers are [and] who and what their competition is. You really need to narrow down your scope.”
Roberta Bradson, owner of the Ampersand store in Orono, said, “We’ve been maintaining rock bottom for about two years. We are a hands-on business, so if there is a problem we can address it directly.”
Bradson’s business and product turnovers have changed since the economic downturn.
“I’ve noticed a new trend. People are coming in here more for the little things like milk and bread versus buying all their groceries at a chain supermarket.”
Bradson said the economic climate is “looking up.”