Survey discovers that most business owners are optimistic about the future, but are, however, concerned about costs

WILLMAR -- Most Minnesota businesses like being in Minnesota and are optimistic about their future, a new report has found.

They're less satisfied, however, with the state's transportation system, and they're especially concerned about the rising cost of doing business.

The report was released this month by Grow Minnesota, a statewide private-sector initiative to encourage business retention and expansion.

Jennifer Byers, vice president of external relations for the Minnesota Chamber of Commerce, points to the number of businesses that said they wanted to stay in Minnesota: 92 percent.

And even though many executives voiced concerns about the state's business climate, the majority surveyed said they had added new employees and 40 percent planned to expand within the next three years, she said.

"Overall the news is really pretty good," she said.

Grow Minnesota uses a strategy that's unique: Confidential one-to-one conversations between executives that help provide a window into how the state's business owners and managers are faring, how they view their future and what their top concerns are.

The project is a partnership between the Minnesota Chamber of Commerce and more than 30 local chambers of commerce, including the Willmar Lakes Area and the Redwood Area chambers.

"Our goal is to assist these companies to stay in Minnesota," Byers said.

It's an important tool for nurturing homegrown business, said Ron Erpelding, who's on the Kandiyohi County and City of Willmar Economic Development Commission joint operations board and is co-chairman of the EDC business retention and expansion committee.

"What it does is make sure the conduit is open," Erpelding said. "Any time we get out there and talk to people and find out what's going on out there, we close the circle."

During its first two years, Grow Minnesota conducted more than 1,300 visits with business executives across the state.

Among some of the findings:

n More than half of the CEOs who received a visit -- 58 percent -- said their company profits have increased over the past two years, and 70 percent reported increased sales.

Southwestern Minnesota companies reported the highest profits of all -- 72 percent said they made money in the past two years.

n More than half across the state had added jobs. In most cases, the job increase was between one and 10 new positions -- but 29 percent have added anywhere from 11 to 40 new positions in the past two years, and 9 percent have added between 41 and 100 new jobs.

n Half said they expected job growth at their business to continue. Only 3 percent said the number of jobs would likely decrease.

n Forty percent said they'd added space in the past two years, and 42 percent said they were planning to build new facilities or expand existing facilities in the next three years.

n Fully half of those planning an expansion said the new facility would be located in the same community. Fifteen percent said they were planning to build a facility outside Minnesota, and 4 percent were planning an expansion overseas.

In most cases, businesses that were expanding elsewhere said it was for business-specific reasons, such as market factors. Taxes also were cited as a consideration for moving outside the state or overseas.

The survey identified several challenges as well.

The cost of health care was the single biggest issue, cited by 76 percent of the respondents. Sixty percent said they were concerned about high state taxes, 58 percent cited worker's compensation rates and 49 percent cited the cost of unemployment insurance.

There appears to be an emerging issue with the cost of complying with environmental regulations; 21 percent of those surveyed said it was a major expense for them.

Minnesota's transportation infrastructure -- both land and air -- received an unfavorable rating by 37 percent of the executives who were surveyed. This percentage was about five points higher in southwestern Minnesota.

"We found transportation to be a top issue almost everywhere," Byers said.

Southwestern Minnesota also had the largest percentage of respondents who said cultural and recreational opportunities were lacking.

Ken Warner, president of the Willmar Lakes Area Chamber of Commerce, said the CEO-to-CEO visits have been valuable in uncovering issues that might otherwise go unvoiced.

In visits conducted with Willmar area CEOs, for instance, it became apparent that many business owners are aging but have no one to whom they can turn over their business when they retire.

"We need to keep track of those businesses," Warner said. "We've got to make sure there's somebody local or regionally who can step up."

Grow Minnesota plans to expand its reach this coming year by adding more chamber of commerce partners, conducting more follow-up visits to businesses, and working more closely with public-sector economic development agencies.

Erpelding said the initiative is "an excellent partnership."

Personal contact with business owners and insight into their needs and concerns is critical for retaining and expanding local businesses, he said. "We don't do enough of that. This helps reinforce that we love having them do business in this area."