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Panel: State’s entrepreneurship ecosystem driving small business growth

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By Chris Cox
Published Sept. 18, 2015

From the Sept. 14-27 issue of the Columbia Regional Business Report

Small business continues to drive South Carolina’s growing economy, thanks in part to a healthy entrepreneurship ecosystem and thriving supply chain market, area leaders said at a recent economic forum.

Coming together to discuss recent polls conducted by sponsors Wells Fargo and USA Today, the panel of business minds agreed that the state is experiencing a renaissance amongst its small businesses. And South Carolina’s citizens agree, too, as 38% of those in-state surveyed by USA Today said there is a growing job market here compared to 32% nationwide.

“People are feeling that way because that is the reality,” said John Denise, president of Advanced Automation Consulting. “It’s all the economic development that’s going on, it’s all the announcements. But South Carolina also has a great ecosystem for entrepreneurship.

“The jobs that go under the radar typically are the small companies and startups that create, in our case, knowledge economy, well-paying jobs. There’s more and more of that all the time and it builds a snowball going down the hill. Those are things we don’t read about in the paper but people can feel it. It’s the younger, knowledge economy workers coming and creating that buzz.”

Perhaps the biggest boom for small business, however, has come from the latest influx of large organizations, said Ann Marie Stieritz, CEO of the S.C. Council on Competitiveness. Recent additions like Volvo and Daimler have created even greater exponential growth, she said, as suppliers filter out into the supply chain once marquee companies move to the state.

The automotive industry has a multiplier effect of 4.0 in South Carolina, though the average multiplier effect in the state is 1.8, she said. And aerospace, which has a $17 billion economic impact in the state, is at 2.2.

Stieritz’s organization counted 466 aerospace-related companies within the state, including military aviation. Most of that firm growth is in small and medium-sized companies.

“For us here in South Carolina, automotive really is the perfect example of what you’ve seen in terms of exponential growth,” she said. “Which really is driven, again, by the suppliers. The attractiveness in the market, because of what was driven by Michelin and BMW very early on.”

The uptick in job growth — the state labor force has grown by more than 63,000 people in the last year, the S.C. Department of Employment and Workforce said in August — is driving more economic development, too. Scott Garvin, president of Garvin Design Group, said his firm is busier now than it has ever been.

“It’s infusing the economy,” he said. “I remember 2006, 2007 we were very, very busy. Now we’re just completely slammed. We’re working all over the state. Greenville’s been very hot, Charleston’s been very hot. But it’s exciting to see what’s going on in Columbia. There’s a lot of neat things happening, there’s momentum.

“I talk to a lot of architects around the state, they’re all hiring. Most of them are small businesses. Contractors are now putting margins on their work; they’re actually making money again.”

The Wells Fargo/USA Today survey asked South Carolinians if there was a healthy business climate here for small and large businesses. Approximately 36% of those polled said there was, higher than the 32% national average.

Garvin can attest to that. When he purchased the City Market development on Gervais Street two years ago, there were few restaurants and retailers moving into the area. But when construction began, he had 15 businesses calling about being in the building, he recalled.

“As a small business, we’ve benefited from that building effect going on in the economy,” he said. “That’s happening all over the Vista and Main Street. It’s really exciting to see that. And most of those folks are small businesses.”

But there is still more left to be done, according to the panel, which also included Midlands Technical College president Ronald Rhames and S.C. Military Base Task Force executive coordinator Charlie Ferrell.

Infrastructure remains the chief priority on any list, leaders agreed, as does a focus on improving and funding statewide education and military. But attracting more knowledge economy jobs to further economic development is also essential.

“You don’t have to write big checks,” Denise said. “Knowledge workers don’t need a whole lot of infrastructure. All they need is Internet and a place to sit. We can do a whole lot more here utilizing the advantages South Carolina has that other states don’t have, such as quality of life and cost of living.”

Changing the tax code is also key, Denise said. He referenced a carpet cleaning company that must file different tax returns in each county that it does business — a tedious task for such a small operation.

“We have a crazy, archaic local tax code where you’re supposed to pay gross receipt taxes in every locale where you do business,” he said. “It’s incredibly cumbersome on a true small business. I think the Legislature could simplify a lot of those things, take that out of there and make it a whole lot easier for all small businesses to operate.”

Reach Chris Cox at 803-726-7545 or on Twitter @chrisbcox.

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