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Minnesota is seeing a record number of new businesses during the COVID pandemic

Minnesota has seen a 26% increase in new businesses during the pandemic.

MINNEAPOLIS — There is no recipe when it comes to starting your own business, even if your business is all about following recipes.

"At first, all of my cakes tasted horrible because I didn't know what I was doing,” Donna Mehta laughs.

Mehta started her company Donna’s Gluten-Free Cakes after she discovered her daughter has Celiac Disease.

She started out with no recipes, and no knowledge about professional baking, but she quickly learned by trial and error.

“It’s really hard to make a square cake,” Mehta laughs. “Anything that is flat and has corners is tough to get just right.”

Mehta has learned a lot of tricks to keep her cakes moist and consistent. She says working without gluten creates a lot of challenges.

“You need to let the cake batter rest, so it doesn’t get grainy,” Mehta explains.

“I use ingredients like sour cream to keep it moist.”

Mehta is now baking two to five cakes a week for her clients.

Her story is just one example of a much larger trend in Minnesota.

"In Minnesota, we've seen a really significant rise of 26% in applications for new businesses during the pandemic,” Sean O’Neil says.

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O’Neil is the Director of Economic Development at the Minnesota Chamber of Commerce. He spends his days looking into numbers and statistics, and right now, the numbers show a significant rise in new businesses across all sectors of the economy.

“It’s been a really big surprise, because if you look at past economic downturns, you typically see a drop in new business formation,” O’Neil says.

According to the U.S. Census Bureau, before the pandemic started, Minnesota had been averaging around 3,000 new businesses a month.

“That number was pretty consistent and was actually on a downward trend in recent years,” O’Neil explains.

However, that number more than doubled to 6,348 in July of 2020, a new record in the state of Minnesota.

“And what surprised a lot of people was that this wasn’t a one-time spike. We have seen sustained levels of new business applications throughout the pandemic,” O’Neil says.

January of 2021 was another good month for new businesses. According to the U.S. Census Bureau, 6,244 new businesses were formed in Minnesota in January of 2021. Since then, the monthly average has been between 4,000 and 6,000 new businesses each month.

"There's some evidence to suggest that it's driven in part by challenges that people have faced during the pandemic, whether that's losing employment, trouble finding childcare, or needing flexibility in their work schedule,” O’Neil says.

The pandemic has also created new opportunities and new ways of doing business that weren’t possible a few years ago.

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“We really saw an opportunity with going virtual and using new technology,” new business owner Anne Rogers says.

Rogers started her company Mezmira in November of 2021. The company provides fashion consulting services to women through video conferencing.

“They can be in their own homes and feel safe and secure and not have to worry about someone coming into their home,” Rogers says.

The process begins with an initial consultation where the designer and client meet to discuss goals and expectations. After that initial meeting, the client purchases a package that fits their needs, and the designer gets to work.

Rogers has a team of four stylists who are now working with clients across the country.

“For us, I think the timing actually couldn’t be better,” Rogers says. “Our target market is really comfortable with Zoom, we live in a Zoom world now.”

A niche that presented itself during the pandemic, much like the niche that Mehta discovered with her gluten-free cakes.

Both business owners are still balancing dreams and dollars. They’re bringing in new clients every day as they try to make their passions profitable long term.

“I hope my economics degree helps me with the business side of it,” Mehta laughs.

“For me, I'd rather be making a cake. I don't even care if you pay for it,”

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