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					               Entrepreneurship – Small and Home-Based Business
University of Maine Cooperative Extension Plan of Work Issue Area Needs Assessment, 2007–2011
   Prepared by James C. McConnon, Jr., Extension business and economics specialist, and Jane E. Haskell, Extension educator

Abstract
The Maine Economic Growth Council reported that during 2002, only 66 percent of Maine jobs paid a livable
wage. The manufacturing sector outlook calls for continued employment losses as traditional natural-resource-
based industries in Maine continue to decline. Between 2001 and 2002, Maine lost 9,700 manufacturing jobs.
Many communities are experiencing a rapid reduction in secure and sustained employment opportunities. This
has forced many Maine families to relocate, secure multiple jobs, reduce their standard of living or increase
their dependency on social services. Stresses related to job and income loss create negative impacts on children
and families.
Growing numbers of residents are considering starting a home-based or microbusiness to secure or sustain a
living wage. Successful start-up of small businesses has played an important role in Maine’s employment
growth during the 1990s and early 2000s and is expected to continue through the next decade. Small business
development and entrepreneurship play a significant role in the state’s current economic development strategy.
Cooperative Extension has developed a niche during the past two decades as one of Maine’s primary resources
for people who are starting or growing a small or home-based business, increasing their chances for success.
We teach potential and existing small and home-based business owners about business resources, evaluation of
information, and business management skills. Our historical success in working with citizens provides a strong
foundation from which to meet current and emerging business needs, and we collaborate with many agencies
that provide business assistance. Our business education programs must continue to provide cutting-edge
programs that embody and model an entrepreneurial spirit within a sustainable, real-world framework.



The scope of this issue area
While the state’s economy has been growing slowly in recent years, there are significant regional economic
disparities. The Maine Economic Growth Council reported in 2004 that during 2002, only 66 percent of Maine
jobs paid a livable wage, and in 2001 about seven percent of all workers held two or more jobs to make ends
meet. The Council also reported that there continues to be a significant income gap between the wealthiest and
poorest counties. Both income and employment growth have been strongest in the southern and coastal areas of
the state, and weakest in the rural, natural-resource-based “rim” counties. In 2003, ten of Maine’s 16 counties
had unemployment rates above the state average of 4.9 percent.
The current situation . . . an overview
A 2003 statewide poll of Maine residents, conducted by Market Decisions of South Portland, found the
economy, specifically jobs, to be a top concern. While the economy has experienced slow growth in recent
years, many people in Maine are very pessimistic about future employment prospects.
Maine’s economic outlook calls for continued steady slow economic growth, with southern and coastal areas of
the state outperforming the rest of the state in the years ahead. Most of the new jobs in Maine are expected to
come from the services and retail trade sectors concentrated in the southern and coastal regions. The outlook for
the manufacturing sector calls for continued employment losses as traditional natural-resource-based industries
in Maine continue to erode and decline. Between 2001 and 2002, Maine lost 9,700 manufacturing jobs,
representing 11.2 percent of all our manufacturing jobs. In northern Maine, hundreds of workers have recently
lost high paying jobs as a result of the bankruptcies of Great Northern Paper Company in Millinocket, Eastern
Fine Paper Company in Brewer, and Lincoln Pulp and Paper Company in Lincoln.

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The top priority of Maine’s Governor and the Department of Economic and Community Development is to
increase economic opportunities. Small business development and entrepreneurship play an important role in
the state’s current economic development strategy. Maine’s economic future is dependent on the successful
start-up, continuation and expansion of small businesses. There are about 140,000 small businesses in Maine.
About 90 percent of them employ five or fewer employees, accounting for about 20 percent of the labor force.
Many of these businesses are home-based and located in the rural areas of the state. Together, these small
businesses contribute significantly to the employment base in Maine.
Successful start-up of small businesses has played a very important role in Maine’s employment growth during
the 1990s and early 2000s and is expected to continue through the next decade. About 25 percent of these start-
ups are home-based. They include every economic sector, from food processing to home childcare. It is
estimated that two out of every three new jobs will be created by small businesses employing fewer than five
people. Many of these businesses are expected to be home-based or microenterprises that produce value-added
products from Maine’s natural resources. Small and home-based businesses represent entrepreneurial strength,
diversity and durability, which contribute to the economic vitality of the state.
What are the societal impacts and consequences in Maine if this issue area is not
addressed or resolved?
The steady erosion and decline of the traditional natural-resource-based industries has adversely affected the
quality of life for many Maine families. Many communities, especially rural ones, are experiencing rapid
declines in secure and sustained employment opportunities. This has forced many Maine families to relocate for
better job opportunities, to secure multiple jobs, to reduce their standard of living or to increase their
dependency on social services. Stresses related to job and income loss have contributed to a variety of negative
impacts on children and families.
What changes need to be made to improve the current situation?
A growing number of Maine residents are considering starting a small business as a way of securing and
sustaining a livable wage. There are also many established small businesses that have great potential to expand
into new markets. Unfortunately, those interested in starting or expanding their own business are often unaware
of the resources available to help them, and many lack the business management skills necessary to successfully
evaluate potential business viability, and start and grow a small business. Many also lack the kinds of computer
skills that, among other things, can offer access to much broader markets. Extension needs to collaborate with
others to determine the most responsive and effective ways to market our resources and provide practical
educational delivery methods.
What type of programmatic or corrective action is indicated or could be taken to
produce the desired results?
Helping potential and existing small and home-based business owners learn about business resources, evaluate
the reliability of information, and develop or strengthen their business management skills can improve their
business decision-making capabilities and increase their chances of success. Extension must strengthen
collaborative efforts with business-assist partners and Maine entrepreneurs to determine how to best provide
information and resources and increase customer access. Extension can also foster the leadership development
needed to address public policy barriers to rural job creation through self-employment and small business
development.
Who else is addressing this issue area in Maine?
Cooperative Extension collaborates with business-assist resource agencies, such as the U.S. Small Business
Administration; the Maine Small Business Development Centers; the Maine Centers for Women, Work and
Community; and regional organizations such as Community Action Programs (CAP). Extension has developed
a niche as one of Maine’s primary resources for people in the earliest stages of starting and growing a small or

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home-based business. Targeted educational efforts can build the capacity of small and home-based businesses
to prosper and take earlier corrective action to reduce the risk of failure. Viable new businesses will allow more
Maine families to secure and sustain a livable wage and improve their quality of life. The knowledge and skills
required to run any business are numerous, complex, and ever changing. Extension can do its part in giving
entrepreneurs a solid core of basic knowledge as well as linking them to other resources that will help these
businesses grow and thrive.

Peer Reviewers
Douglas Babkirk, program administrator, University of Maine Cooperative Extension
Anne Eaton, proprietor, Balanced Books
C Joyce Kleffner, educator, University of Maine Cooperative Extension
Duke Thatcher
David Thompson, proprietor, Church Street Consulting


References
Maine Department of Economic and Community Development, in cooperation with the Kauffman Foundation. Promoting and
Sustaining an Entrepreneurship-Based Economy in Maine. http://www.state.me.us/decd/decdweb/OBDapril262003.htm (accessed
July 2004).
Maine Development Foundation. Measures of Growth 2004: Performance Measures and Benchmarks to Achieve a Vibrant and
Sustainable Economy for Maine. Augusta, ME: Maine Economic Growth Council, 2004.
http://www.mdf.org/megc/measures/megc2004.pdf (accessed July 2004)
Market Decisions. Mainers’ View of Economy Continues to Improve - Rising Faster than National Indices. South Portland, ME, 2003.
http://www.marketdecisions.com/index2.htm (accessed September 2004).
Maine Department of Labor, Labor Market Information Services. http://www.maine.gov/labor/lmis/ (accessed September 2004).
Joanne H. Pratt. Homebased Business: The Hidden Economy. Dallas, TX: Joanne H. Pratt Associates, for the U.S. Small Business
Administration Office of Advocacy, 1999. http://www.sba.gov/advo/research/rs194tot.pdf (accessed July 2004).
James C. McConnon. “Maine Microenterprises and Employment Levels by County, 2001.” Working paper, University of Maine
Cooperative Extension, Orono, Maine, 2003. http://www.umext.maine.edu/topics/county2001.pdf (accessed July 2004).
Atasoy, Sibel, James C. McConnon and Todd Gabe. “The Economic Importance and Impact of Microenterprises to the New England
Economy.” Selected paper presented at the Annual Northeast Agricultural and Resource Economics Association meetings, Halifax,
Nova Scotia, Canada, June 2004.
Maine Department of Economic and Community Development. “Meeting Maine’s Economic Needs.”
http://www.maine.gov/governor/baldacci/vision/economy.html (accessed July 2004).




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