The State of Small Business: Maine

• Maine small business owners praise the state’s readily available capital, collaborative environment and straightforward regulations.
• Maine’s small business challenges include a small labor force, limited rural internet access and tourism-based economic fluctuations.
• An August 2021 study found Maine to be the business-friendliest state in the nation.
• This article is for current and prospective Maine small business owners.

As part of our yearlong project, we plan to report on the small business environment in every state in America. In this installment, we asked a few of Maine’s 150,593 small business owners about the challenges and opportunities of operating in their state. Here’s what they had to say.

Maine is a state where local small businesses are as much a part of the culture as they are the economy. Entrepreneurship is so prevalent that companies with fewer than 500 employees make up 99.2% of Maine’s private workforce. Small business owners in Maine have reported reasonable regulations, fair access to working capital, and strong community support as some of the most enticing aspects the Pine Tree State has to offer.

A brief overview of the Maine business economy

Maine’s sparse population presents a challenge for brick-and-mortar stores, and helps explain the importance of tourism to Maine’s highly seasonal economy. Modest economic growth places Maine mid-tier nationwide, coming in at 17th in state GDP growth between 2016 and 2019, according to the Bureau of Economic Analysis. 

The small business owners who spoke to Business News Daily don’t seem worried about any of these problems. Business is good, they said, and entrepreneurs report a collaborative environment in which they don’t feel outgunned by big businesses.

Opportunities for small businesses in Maine

Business owners in Maine enjoy several significant advantages:

• Readily available capital
• Supportive communities and a collaborative environment
• Straightforward regulations
• Prevalence of family-owned businesses

We’ll explore each of these areas in more detail. 

1. Maine entrepreneurs can access readily available capital.

It can be difficult for a new business to access the capital it needs through traditional bank loans. But in Maine, most entrepreneurs said they had no issues financing startup costs, attributing this ease to small community banks and a robust network of investors and business grant opportunities.

“We did our financing through a local bank, and they were much more willing to engage, as opposed to some of the larger, corporate-owned banks,” said Benjamin Goldman, owner of the farm-to-table restaurant The Velveteen Habit. “It felt like they were interested in working with small businesses and being part of the local community.”

Nancy Strojny, chapter chair of Portland SCORE, said Mainers have worked hard to establish a pool of financial resources for small businesses because of their importance to local economies and the state’s economy as a whole. With so many small businesses in the state, she said it’s essential to ensure they have several options for financial help. 

One such resource is the Maine Technology Institute, which offers loans and grants for startups and expanding businesses. Strojny also pointed to an organization called Maine Angels, which connects investors and mentors with business owners. There are also many private investors throughout the state.

“We really make capital available to people starting a business. Access to capital is very robust here,” Strojny said. “We have some interesting funding resources in the state of Maine.”

2. Maine businesses enjoy supportive communities and a collaborative environment.

A public that actively seeks to support and patronize its neighbors’ establishments is always a boon to small businesses. Maine has that in spades, the entrepreneurs we spoke with said. With a desire for local goods and services and a personal interest in the people behind the counter, Maine is a statewide throwback to the days of small-town Americana.

“Maine is like one big small town,” said Nancy Marshall, owner of the public relations firm Nancy Marshall Communications, making it easier to network with people and make contacts.

The state’s small-town feel also means that customers are more committed to doing business locally.

“Maine’s been sort of a locally driven economy for a long time. The local people here really do have that commitment,” said Constance Bodine, the co-owner of Sweetgrass Farm Winery and Distillery. “The demand for that type of local product is here, and that’s a very strong reason why we wanted to come here.”

Strojny said Maine’s business owners are unique in their willingness to work together, even with their competition. The sense of community is palpable.

“I’ve only been here for six years, and it’s the most collaborative environment I’ve ever seen,” Strojny said.

3. Maine offers straightforward regulation-compliance and access to elected officials.

For most of Maine’s small business owners, complying with state legislative issues and obtaining required permits or business licenses is relatively straightforward. In the worst cases, when mistakes are made, the business owners reported patience on the state’s part and a willingness to help correct the errors.

“It feels very much like if you follow the rules, pay your taxes on time, do things correctly, and contribute to the community, there is a very respectful two-way road,” Goldman said.

Ron Dillon, district director of the Maine SCORE network, agreed. In his mentoring capacity, he’s seen many small businesses move through the state’s regulatory framework, and it’s manageable for most to navigate the requirements.

“What I’ve found, working with small businesses, is that it’s very easy for them to get licenses and very easy for them to work with the state of Maine,” Dillon said. “[The state] has people who will take a lot of time to explain to people what it takes to get started and run a small business.”

Bodine said that while her industry is tightly regulated and plagued by what she called “antiquated” laws, she still enjoys wide-open access to her government representatives. She added that she regularly testifies before the state legislature, along with members of the Maine Distillers’ Guild, to modernize the state’s alcohol laws.

“Our government representatives are right here in our community,” Bodine said. “I know them all, and quite a few have come to the winery. We can work with them. It’s nice to see them interested and involved with small businesses.”

4. Maine is a haven for legacy small businesses.

Every person we spoke to mentioned how plentiful small family-owned operations are in both urban and rural areas. Many said the buy-local trend is rooted in Maine culture. As a result, tight-knit, community-centric businesses have developed. 

“Traditionally, things have grown out of local business serving local communities,” said Dan Bookham, director of business development for Allen Insurance and Financial. “The size of the population, the size of communities and the nature of the economy just kind of says small businesses will thrive.”

On the other hand, there is a dearth of large corporations and big-name franchises. “If you wanted to go to a McDonald’s, you’d have to drive about 20 miles out of town,” Bodine said.

The lack of big business also provides opportunities to smaller companies, which then don’t feel squeezed out or undercut by economies of scale. In 2016, the most recent year for which U.S. Census Bureau data is available, Maine ranked second in the nation for its self-employment rate (15.4%), trailing only Montana (16.1%). 

“There’s not a lot of big business in Maine. Everybody is a small business,” added Kim Palermo, a partner at Proforma Marketing Essentials.

Challenges small businesses in Maine face

Small business owners in Maine face some of the following challenges: 

• Limited labor force
• Remote locations
• Seasonal ups and downs

1. Maine businesses deal with a limited labor force.

According to the U.S. Bureau of Labor Statistics, Maine’s unemployment rate is 4%. That would be good news, but the decrease is partly due to a reduction in the overall labor force, which has decreased by 3.1% since early 2020. Unfortunately, this means Maine’s small business owners have found it increasingly difficult to find the help they need.

Compounding the labor shortage is Maine’s scattered population. With only 1.38 million people in more than 35,000 square miles (91,000 square kilometers) of territory, Main’s residents can have trouble finding much of anything that a big-city dweller would consider centralized. This leaves small business owners heavily reliant on their local communities, which might lack the necessary skilled labor some entrepreneurs require.

2. Maine’s remote locations are a challenge for small businesses.

Another significant challenge for Maine is its geographical remoteness and the fact that communications technology can be unreliable in more rural areas. 

“Being in a small market, we have to branch out,” said Palermo. “We can’t just rely on the area that we live in. We have to go outside of our area in order to maintain and grow our sales.”

Dillon pointed out that spotty internet and cellphone service are also problems. In certain areas, access to communications networks is extremely limited. “Our infrastructure still has some work to be done,” Dillon said. “Businesses that want to start up here need to look at whether they have the ability [to connect]. In Bangor and Portland, it’s all right, but in other areas, they’re having trouble. We’re seeing ourselves develop, but we’re so far behind the larger states.”

However, Marshall said there’s reason to be optimistic. While internet connectivity and cell service aren’t quite up to snuff across the entire state, there’s a big push to change that.

“There’s a big movement for broadband connectivity all over the state,” Marshall said. “That’s something we need to work on to grow Maine’s economy. A lot of people want to live in the more remote area and still conduct business, so they’re going to want good cell service and internet.”

3. Maine businesses face seasonal ups and downs.

Tourism in Maine is a significant component of many businesses’ success. Unfortunately, in a tourism-driven economy, many entrepreneurs have only a few months out of the year to make the most of their profits. While an influx of tourists in the summer months is a benefit, the inevitable lull that follows makes Maine’s seasonal ups and downs a challenge.

“Maine’s small business climate primarily functions at a high capacity during the summer season,” said Cynthia Morse, owner of the Wagon Wheel motels. “A majority of southern Maine businesses revolve around tourists from about June through September. During that time, Maine sees a larger increase in income and business, and so we have to prepare for that at a city and state level.”

The seasonal ebb and flow is not confined to hospitality-based businesses. Restaurateurs and retailers can take quite a hit when out-of-state visitors return home. In 2019, more than 21.8 million people visited Maine throughout the year, down from 32.9 million in 2014.

“We’re in a seasonal, coastal market where the population probably quintuples over the summer,” Goldman said, adding that many businesses close down for several months each year. “That is a big challenge in a lot of places in Maine.”

Resources for small businesses in Maine

If you’re a small business owner in Maine looking for resources to help you move forward, here are a few organizations to consider.

Maine SCORE

SCORE’s volunteer business professionals and expert mentors give counsel and guidance to entrepreneurs looking to start or expand their businesses. The services are free and volunteer-driven. Here are some of the chapters in Maine:

U.S. Small Business Administration (SBA) district offices

The SBA offers SBA loans and grants, as well as 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.

CEI Maine

CEI Maine is a network of counseling centers throughout the state that offers services at no cost to the client. CEI offers assistance from qualified mentors in different areas, including startups, marketing, government procurement, loan packaging and international trade.

Maine Small Business Development Centers

Maine hosts more than a dozen development centers for small businesses. Each is dedicated to supporting the development and retention of small businesses, helping entrepreneurs do everything from crafting business plans to navigating the state’s tax code. 

Maine small business FAQs

Here are some questions aspiring entrepreneurs often ask about Maine’s small business community.

Is Maine small business-friendly?

Yes, Maine is small business-friendly. In fact, a Bangor Daily News survey ranked Maine as the best state to start a business. Maine also ranked third in a U.S. Chamber of Commerce study of states with the fastest-growing small businesses. 

What is considered a small business in Maine?

In its profile of the Maine business economy, the SBA defines small businesses as companies that hire fewer than 500 employees. However, some SBA documents concerning the national economy expand this definition to include certain businesses with up to 1,500 employees. Other documents base this definition on a company’s income. The determining factors may depend on the industry.

What percentage of Maine small business owners are women, Hispanic, and other racial minorities?

According to the SBA’s Maine business economy profile, women own 40.2% of Maine small businesses. Women in Maine comprise 51.3% of the overall population, according to the U.S. Census Bureau.

The SBA has also found that Hispanic people comprise 1.1% of Maine business owners, and racial minorities as a whole comprise 3.3%. Census data from 2020 shows that Hispanic people comprise 18.7% of Maine’s overall population. Racial minorities in general make up 38.4% of the population.

Max Freedman contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.