As part of our yearlong project "The State of Small Business," Business News Daily plans to report on the small business environment in every state in America. In this installment, we asked a few of Maine's 142,186 small business owners about the challenges and opportunities of operating in their state. Here's what they had to say.
Maine is a state where local, small businesses are as much a part of the culture as they are a part of the economy. Entrepreneurship is so prevalent that companies with fewer than 500 employees made up three-fifths of Maine's private workforce in 2014, according to the U.S. Census Bureau. Small business owners reported reasonable regulations, fair access to working capital and strong community support as some of the most enticing aspects the Pine Tree State has to offer.
However, Maine's sparse population presents a challenge for brick-and-mortar stores and helps explain the importance of tourism to Maine's highly seasonal economy. Anemic economic growth places Maine near the bottom of the barrel nationwide, as the state trails only Virginia, Alaska and Mississippi in state GDP growth for 2014, according to the Bureau of Economic Analysis. But if that's a problem, the small business owners who spoke to Business News Daily don't seem worried. Business is good, they said, and entrepreneurs report a collaborative environment in which they don't feel outgunned by big businesses.
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Readily available capital
Sometimes it can be difficult for a new business to access the capital it needs through traditional loan options. But in Maine, most entrepreneurs said they had no issues finding the startup money they required, attributing the ease of financing to small, community-based banks and a robust network of investors and grant opportunities.
"We did our financing through a local bank, and they were much more willing to engage, as opposed to some of the larger, corporate-owned banks," Benjamin Goldman, owner of farm-to-table restaurant The Velveteen Habit, told Business News Daily. "It felt like they were interested in working with small businesses and being part of the local community."
Nancy Strojny, chapter chair of Portland SCORE, said Mainers have worked hard to establish a pool of financial resources for small businesses because of the importance of those companies to the state's economy as a whole. With so many small businesses in the state, she said, it's important to ensure they have a number of options to look to for financial help. One such source is the Maine Technology Institute, which offers loans and grants for startups and expanding businesses. Strojny also pointed to the organization known as Maine Angels, which connects investors and mentors with business owners, as well as a bevy of private investors throughout the state.
"We really make capital available to people starting a business. Access to capital is very robust here," Strojny said. "We have some interesting funding resources in the state of Maine."
Supportive communities and a collaborative environment
A public that actively seeks to support and patronize its neighbors' establishments is always a boon to small businesses. Maine has got that in spades, said the entrepreneurs we spoke with. With a desire for local goods and services, as well as a personal interest in who the person behind the counter is, Maine is like a statewide throwback to the days of small town Americana.
"Maine is like one big small town," Nancy Marshall, owner of the public relations firm Nancy Marshall Communications, said. Marshall said that makes it easier to network with people and make contacts.
The state's small-town feel also means that customers are more committed to doing business locally.
"Maine's been sort of a locally driven economy for a long time. The local people here really do have that commitment," Constance Bodine, the co-owner of Sweetgrass Farm Winery and Distillery, said. "The demand for that type of local product is here, and that's a very strong reason why we wanted to come here."Credit: Sweetgrass Farm Winery and Distillery
Strojny, chair of SCORE's Portland chapter, said Maine's business owners are unique in their willingness to work together, even with their own competition. The sense of community, she said, is palpable.
"I've only been here for six years, and it's the most collaborative environment I've ever seen," Strojny said.
Simple regulation-compliance and access to elected officials
For most of Maine's small business owners, complying with state regulations and obtaining required permits or licenses is relatively simple and straightforward. In the worst cases, when mistakes are made, the business owners reported patience on the state's part and a willingness to help correct the errors.
"It feels very much like if you follow the rules, pay your taxes on time, do things correctly and contribute to the community, there is a very respectful two-way road," Goldman, The Velveteen Habit's owner, said.
Ron Dillon, district director of the Maine SCORE network, said he agreed. In his mentoring capacity, he's seen many small businesses move through the state's regulatory framework, and it is manageable for most to navigate the requirements, he said.
"What I've found, working with small businesses, is that it's very easy for them to get licenses and very easy for them to work with the state of Maine," Dillon said. "[The state] has people who will take a lot of time to explain to people what it takes to get started and run a small business."
Bodine, owner of the Sweetgrass Farm Winery and Distillery, said that while her industry is tightly regulated and plagued by what she called "antiquated" laws, she still enjoys wide-open access to her government representatives. She added that she regularly testifies before the state legislature, along with members of the Maine Distillers' Guild, in an effort to modernize the state's alcohol laws.
"Our government representatives are right here in our community," Bodine said. "I know them all, and quite a few have come to the winery. We can work with them. It's nice to see them interested and involved with small businesses."
Small business legacy
Every person we spoke to mentioned how plentiful small, family-owned operations are, in both urban and rural areas of the state. The "buy local" trend is rooted in Maine culture, many said. As a result, tight-knit, community-centric businesses have developed. On the other hand, there is a dearth of large corporations and big-name franchises.
"Traditionally, things have grown out of local business serving local communities," Dan Bookham, director of business development for Allen Insurance and Financial, said. "The size of the population, the size of communities and the nature of the economy just kind of says small businesses will thrive."
"If you wanted to go to a McDonald's, you'd have to drive about 20 miles out of town," Bodine said.
The lack of big business also provides opportunity to the smaller companies, which don't feel squeezed out or undercut by economies of scale. In 2013, the most recent year for which U.S. Census Bureau data is available, Maine ranked fourth in the nation in the self-employment rate, at 12.2 percent, following only South Dakota, Vermont and Montana. That was actually a decrease from 2012, when the self-employed rate was a staggering 16.3 percent, the third highest in the nation that year, according to the U.S. Census Bureau.
"There's not a lot of big business in Maine. Everybody is a small business," Kim Palermo, owner of Elm Street Marketing Essentials, said.
Limited labor force
Maine has been lucky in that it's seen unemployment dramatically decrease since hitting a peak in 2010. Now, the unemployment rate is hovering just above a healthy 4 percent, according to the U.S. Bureau of Labor Statistics. That would be good news, except that the decrease is due in part to a reduction in the overall labor force, which shed more than 20,000 workers since August 2013 as people retired or gave up searching for employment. Unfortunately, this means Main's small business owners have found it increasingly difficult to find the help they need.
"Probably the biggest obstacle that we encountered in 2015 was labor and staffing," Rick Wolf, a consultant at The B&B Team, said.
Compounding the labor shortage is Maine's scattered population. With only 1.33 million people in more than 35,000 square miles (91,000 square kilometers) of territory, Main's residents can have trouble finding much of anything that a big-city dweller would consider centralized. This leaves small business owners heavily reliant on their local communities, which might lack the necessary skilled labor some entrepreneurs require.
Another big challenge for Maine is its geographical remoteness. Not only are large markets distant, but also, communications technology is not so reliable in the more rural areas. For small business owners, both of these realities present a problem.
"Being in a small market, we have to branch out," Palermo, owner of Elm Street Marketing Essentials, said. "We can't just rely on the area that we live in. We have to go outside of our area in order to maintain and grow our sales."
Dillon, the state's SCORE district director, said spotty Internet and cellphone service are also big problems. In certain areas, access to communications networks is extremely limited.
"Our infrastructure still has some work to be done," Dillon said. "Businesses that want to start up here need to look at whether they have the ability [to connect]. In Bangor and Portland, it's all right, but in other areas, they're having trouble. We're seeing ourselves develop, but we're so far behind the larger states."
However, Marshall, of Nancy Marshall Communications, said there is reason to be optimistic. While Internet connectivity and cell service is not quite up to snuff across the entire state, she said there is a big push to change that.
"There's a big movement for broadband connectivity all over the state," Marshall said. "That's something we need to work on to grow Maine's economy. A lot of people want to live in the more remote area and still conduct business, so they're going to want good cell service and Internet."
Seasonal ups and downs
Tourism in Maine is a big component to many small businesses' success. Unfortunately, in a tourism-driven economy, many entrepreneurs have only a few months out of the year to make the majority of their profits. While an influx of tourists in the summer months is decidedly a benefit, the inevitable lull that follows makes Maine's seasonal ups and downs a challenge.
"Maine's small business climate primarily functions at a high capacity during the summer season," Cynthia Morse, owner of the Wagon Wheel Motels, said. "A majority of southern Maine businesses revolve around tourists from about June through September. During that time, Maine sees a larger increase in income and business, and so we have to prepare for that at a city and state level."
The seasonal ebb and flow is not confined to hospitality-based businesses, either. Restaurateurs and retailers can take quite a hit when the out-of-state visitors return home. In 2014, more than 32,902,074 people visited Maine throughout the year, up more than 10 percent from 2013, according to a study performed on behalf of the state.
"We're in a seasonal, coastal market where the population probably quintuples over the summer," Goldman said, adding that many businesses close down for several months each year. "That is a big challenge in a lot of places in Maine."
Resources for small businesses in Maine
If you're a small business owner in Maine looking for resources to help you move forward, here are a few organizations you might want to learn more about.
SCORE's volunteer business professionals and expert "mentors" give counsel and guidance to entrepreneurs looking to start or expand their businesses. The services are entirely free and volunteer-driven. Here are some of the chapters in Maine.
U.S. Small Business Administration (SBA) District Offices
The U.S. SBA offers financing and grants, as well as consultations and counseling services. There are also opportunities to apply for federal government contracts through the SBA and avenues for obtaining assistance in the wake of natural disasters.
A network of counseling centers throughout the state of Maine that offers services at no cost to the client. CEI offers assistance from qualified mentors in different areas, including startups, marketing, government procurement, loan packaging and international trade.
Maine Small Business Development Centers
Maine hosts more than a dozen development centers for small business. Each is dedicated to supporting the development and retention of small business, helping entrepreneurs do everything from craft business plans to navigate the state's tax code. You can find your region's small business development center at the link below.