Located in the middle of the U.S. East Coast and next to the nation’s capital, Maryland has historically been a hub for research, trade and businesses of all kinds. In particular, small businesses are central to the state’s economy.
Here are some quick facts about small businesses in Maryland:
Maryland felt the economic strain brought on by the COVID-19 pandemic. Still, the overall attitude among business owners is optimistic. Over 62% report that their business is recovering, according to research from Bank of America. In fact, many sectors of Maryland’s economy are steadily recovering from the pandemic. The state’s 2021 GDP was $364.24 billion, the 15th highest in the country, according to Statista, and up 3.2% from 2020.
What opportunities and challenges are business leaders encountering in Maryland? We spoke with Maryland-based entrepreneurs and small business owners to find out the state’s current business landscape. Here’s what they had to say about the upsides and challenges of doing business in Maryland.
Scientific research and technology flourish in Maryland due partly to the state’s highly educated workforce; 40% of Maryland residents hold bachelor’s degrees, and almost 20% have additional professional or graduate degrees.
Many of the region’s most innovative startups are supported by – or emerge from – Maryland’s acclaimed universities. Here’s more about the role of Maryland’s prestigious academic institutions in the state’s booming science and tech sectors:
In addition to having a prestigious scientific sector, Maryland is an emergent tech hub. The state is home to myriad cybersecurity and IT companies, as well as venture capital-funded startups in digital health, telecommunications and more.
Maryland entrepreneurs report consistent community and government support for small businesses, including the following resources:
“[TEDCO is] always promoting us and giving us opportunities to get in front of their stakeholders, as well,” Davis said. “I can’t say enough good things about what the state has invested to try to catalyze economic and entrepreneurial growth here.”
“TEDCO has helped us immensely,” echoed Tomseth. “[It was] an early investor and also provided resources such as executive coaching and consulting that saved us money.”
Maryland’s prime spot on the mid-Atlantic seaboard offers entrepreneurs a strategic location for their new businesses, for several reasons.
Tourism has long been a mainstay of Maryland’s economy, with beaches such as Ocean City and attractions like the National Aquarium drawing millions of tourists yearly. Tourism benefits the hospitality industry, including hotels, retail, dining and nightlife.
However, the COVID-19 pandemic hit Maryland’s tourism sector hard. In 2020, the state’s visitor volume decreased by 40.5%, and travel spending dropped 43%, according to the Maryland Office of Tourism.
COVID hit the hotel industry particularly hard. The state lost 42,631 hotel-supporting jobs and 13,640 direct hotel jobs, per data from the American Hotel and Lodging Association. Retail stores and restaurants also struggled, particularly in cities and beach towns typically bolstered by travelers during the summer.
State and city authorities have poured millions of dollars of grant funding into rebuilding and strengthening pandemic-affected sectors. Still, new business owners may not want to enter the tourism industry during this tumultuous period; they should also be wary of other recovering industries.
Businesses operating in Maryland should be prepared to pay fairly steep taxes. Here are some financial factors you should consider when doing business in Maryland:
Despite Maryland’s burgeoning startup scene, the state’s tech-sector entrepreneurs often struggle to find early-stage funding because investors are wary of new companies. “Most people will tell you that there’s a bit of risk aversion in the area when it comes to pre-seed funding, especially relative to other similarly sized ecosystems,” Davis said.
EcoMap successfully raised its pre-seed round by working with an accelerator Techstars brought to Baltimore. However, the process did have challenges. “The biggest barrier is more early-stage funding opportunities,” Davis said, “but it seems like we’re on the right track.”
Finding early-stage funding in Maryland isn’t impossible, but it might require networking and creativity. Ford also suggested that Maryland businesses that are struggling to find early-stage funding take advantage of remote work’s prevalence to expand their funding horizons.
“Remote work and meetings through Zoom are now normal, so there’s no reason not to engage with investors that were traditionally limited to major startup hubs like Silicon Valley or New York City,” Ford advised.
The founders we spoke with also benefited tremendously from local and city-level resources, like UpSurge Baltimore, which focuses on supporting local startups with diverse leaders per the Equitech model. Tapping into resources like this can help connect small business owners to funders who invested in their specific community.
Here’s what you need to know about starting a business in Maryland:
Starting a business in Maryland requires selecting a business structure and filing the appropriate tax and employer identification documents.
Here are resources for getting started:
Maryland state and local governments require many, but not all, businesses to have a business license. Visit the Maryland OneStop Portal to find out if you need to apply for a business license and file any applications and documents.
Registering a trade name or business name in Maryland begins with registering your business with the state. Visit Maryland Business Express to register your business name and learn more about the requirements. The filing fee is $25.
Regarding small business insurance in Maryland, businesses with at least one employee must provide workers’ compensation insurance. If a business uses vehicles during its operations, it is also required to maintain a commercial vehicle insurance policy. Learn more about insurance requirements from the Maryland Business Express insurance page.
If you’re a small business owner in Maryland and you’re looking for resources to help you move forward, here are a few organizations to consider.
SCORE’s volunteer business professionals and expert business mentors give counsel and guidance to entrepreneurs who are looking to start or expand their businesses. The services are entirely free and volunteer-driven. Here are some of the chapters in Maryland:
The SBA offers financing, grants, 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. Learn more by visiting the U.S. SBA District Office.
Maryland hosts several small business development centers. Each is dedicated to supporting the development and retention of small businesses and to helping entrepreneurs craft business plans and navigate the state’s tax code. Find your region’s small business development center via the Maryland SBDC Network.
TEDCO provides new technology and life-science startups with various resources, including funding, entrepreneurial development and coworking spaces. It offers grants, pitch guidance and executive training, and can help early-stage companies build support networks.
Despite having somewhat high business costs, Maryland is a supportive home for new companies. While it may take some time to find early investors, the active and welcoming tech scene can help you build your startup, and the community is eager to support small businesses. Your business can succeed in Maryland, especially if you tap into state and local resources.
Adam Uzialko contributed to the reporting and writing in this article.