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Cause for optimism for Minnesota's small firms as they expect profits to rise

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Things are looking up for small businesses in Minnesota, who have seen their profits rise and their optimism for the future grow over the last year.

A national survey by Thumbtack and Bloomberg quizzed hundreds of Minnesota small business owners on how conditions have changed over the past year.

The results paint a picture of improved trading for many in the state, with 80 percent of respondents saying they expect their business to be doing better three months from now, with one in six expecting a 10 percent bump in profits during the same period.

There's good news for workers as well, with more than a quarter of small businesses saying they're planning to give their employees pay raises in the next three months.

But while the outlook is good and some can pay more,��not many are in a position to take on new staff, with only 26.2 percent saying they had been looking to fill full or part-time positions in the last few months.

Inflationary rises being passed on to consumers

Minnesota ranked 18th overall nationwide for sentiment among small businesses, but where the state stood out is that many businesses would likely pass increased costs onto customers.

Almost 40 percent responded that if their costs were to rise by 5 percent, they would pass the whole amount onto their customers, while nearly 35 percent said they would pass on half of the cost rise.

This is higher than anywhere else in the United States, which means that Minnesota's small businesses rank 1st in Thumbtack's "Inflation Expectation Index" for April.

Not so Minnesota Nice for businesses?

While the state is known for "Minnesota Nice," small businesses told the survey that they think it is an unfriendlier place to do business compared to a year ago.

Minnesota was given a "B" score in 2014 for friendliness, which is based on responses to questions about how easy it is to start a business and hire staff, and how business owners rate things like tax codes, zoning and health and safety regulations. In 2013 the state scored an "A-."

The biggest gripe among small businesses is the state's tax code, which might well be due to Minnesota's high level of corporate tax –at 9.8 percent, it is the 3rd highest in the nation, according to the Minnesota Tax Foundation.

On the plus side, Minnesota was given an "A" for ease of starting a business, and a "A+" for the training and network programs offered by state and local governments.

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