Title

Building an Information Technology Consulting Business in Minnesota

Author

Todd A. Voge, Concordia University, St. Paul

Date

2002

Document Type

Thesis

Degree Name

Master of Arts

Chairperson (Advisor 1)

Dr. Richard Brynteson

Reader (Advisor 2)

Thomas R. Hanson

Abstract

Starting a business and going out on your own is the dream of many people. You are the boss. You set your own hours so there is time off to spend with family and friends. Or is that really the case? This paper will look at starting a business in Minnesota. What ramifications are there? Does Minnesota have an environment conducive to entrepreneurs?

Recent literature shows that Minnesota has one of the highest tax rates, both personal and corporate, in the United States. Business startups rank very low in the state. Venture capitalists do not seem to be investing in this state as much as others. University of Minnesota President, Mark Yudof, put together a working group of individuals from across the state to try and come up with ideas to help make Minnesota a business-friendly state. The working group had members from all types of business, academia, government and citizens. They met over six weeks and came up with numerous ideas to help make Minnesota better. Their findings have been given to the state legislature where the ideas are now becoming law.

Minnesota has started to rank higher in the nation in terms of high-technology companies. Many of the companies are classified as service or consulting companies. The market seems to be tolerating the high numbers of these businesses. Minnesota's service industry as a whole is growing at a faster pace than other sectors.

Starting a business takes much work. A prospective new owner must decide how to organize the new entity, construct a business plan to secure financing from lenders, decide on what outside services are necessary, and decide on a location for whatever business they are opening. Trying to wade through the legal and governmental obstacles can be difficult. Many towns have groups of business professionals who help prospective owners set up their new business. South Central Technical College, part of the Minnesota State College and University system provides business-consulting services to prospective owners for free. Services such as these help a new owner get set up, while keeping overhead costs down.

Meeting with eight owners, who own six businesses between them, and asking them questions about their challenges and successes, have shown that a business can operate in Minnesota given the right circumstances. A business owner must overcome many hurdles to make his or her business a success. Many of these hurdles are governmental or legal. Other obstacles deal with the owner and the business themselves. Will the new owner spend the time and energy necessary to ensure success? The success or failure of the business depends heavily on how the owner chooses to operate the business.

After conducting a review of applicable literature and interviews with business owners, it was concluded that it is possible to open a new business in Minnesota, but the challenges are many. It may be worthwhile waiting a few years and allow recent changes in the Minnesota and federal tax code and regulations to take effect. A reevaluation after that happens may show the benefits outweighing the challenges. At this time, though, it does not seem prudent to jump into a new venture until the economy decides to pick up.

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