Minnesota sees new businesses launching at high rates

New businesses are launching across Minnesota at rates that are much higher than usual, according to the Minnesota Department of Employment and Economic Development.

"In times of recession, business starts to actually go up. People are looking for new ways to make money. They might be laid off or face other challenges, or they see a disruption in the market and they want to take advantage of that," said DEED Commissioner Steve Grove.

The state saw 7,223 new business filings in September, compared to 5,588 from the same month last year, marking a nearly 30% increase. DEED said the first week of October continued that trend, with a 24% year-over-year increase.

"As the fall and winter approach and people have less savings and less unemployment insurance benefits to hold them over, starting something new is an option that a lot of people are considering," Grove said. "For people who are feeling like they’re at a dead-end, there are opportunities to start things that may give you a new angle on a career."

Lake City Sandwiches is a new business in Minneapolis that launched in September.

"We’ve had a really good response so far," said owner Carrie McCabe-Johnston.

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McCabe-Johnston is the chef and owner of Nightingale, a longtime restaurant on South Lyndale Avenue in Uptown. She said she dreamed of opening a separate sandwich shop ever since visiting Italy a few years ago.

"I had the business plan all set and ready to go, the menu designed, and that’s when the shutdown happened. We were like, okay, well, let’s change this into a pickup and delivery business," McCabe-Johnson said.

She said they are operating under the ‘ghost kitchen’ model, using an empty space inside Nightingale to run Lake City Sandwiches.

"’Ghost kitchen’ is a term for a trend that’s been happening nationwide, of people utilizing their restaurants or commissary spaces where you don’t have actual guests or diners. We had this space in our basement that was once dry storage so turned it into an operational prep kitchen," McCabe-Johnston said.

While she hopes to someday expand the business into its own brick-and-mortar location, she said the new business serves multiple purposes, including adding new streams of revenue for Nightingale during a time when restaurants are still limited to 50% capacity.

"We knew we needed to do something to help Nightingale through what could be a really scary winter," McCabe-Johnston said. "I think a lot of people are figuring out ways right now to be creatively savvy and keep their businesses alive."

Lake City Sandwiches is open from 11 a.m. to midnight daily, offering focaccia-based sandwiches for pickup or delivery.

McCabe-Johnston said the new business allowed them to add 100 hours of new shifts and rehire two former bartenders as sandwich makers.

"We were certainly able to help create jobs. I gave a paycheck to one of our newest sandwich guys the other day and it was the first one he had gotten since March and he was really excited to get it," McCabe-Johnston said.

She said the business will also help prop up other community organizations.

"Fifty cents of every sandwich sale will go to a socially conscious charity, a different one each month," McCabe-Johnston said.

She hopes people will support local businesses over the coming months.

"I’m fearful that we’re going to come out of this pandemic and our restaurant horizon is going to be all chains," McCabe-Johnston said. "We’re really proud of what we’re doing. We make our own bread daily, we source our meat all sustainably, we’re making everything in house, including the potato chips and cookies, so we hope people eat local."

Grove said the state is working to help small businesses survive and succeed.

"This is an area where government and business have got to partner together to help as many Minnesotans as possible start something new and be successful at it. We have some programs to help make that happen. We have an Emerging Entrepreneur Loan Program that offers assistance. We also have a program called Launch Minnesota, focused on high-tech startups, which create some of the most jobs of any industry in the state."

Click here to learn more about the Emerging Entrepreneur Loan Program.

For more on Launch Minnesota, click here.

McCabe-Johnson said they used a Small Business Association loan to help purchase new equipment for the sandwich business, which they otherwise would not have been able to afford.

"It sounds really scary to be starting a business right now but you sometimes have to take that leap," McCabe-Johnston said.

You can find more on Lake City Sandwiches here.