As part of our yearlong project "The State of Small Business," Business News Daily plans to report on the small business environment in every state in America. In this installment, we asked a few of South Carolina's 400,000 small business owners about the challenges and opportunities of operating in their state. Here's what they had to say.
After some deep lows, South Carolina came out of the Great Recession looking strong, and continues to log adequate growth rates year after year. That economic growth has led to a slight increase in per capita personal income as people have returned to work, but the labor market isn't so tight that it breeds intense competition for new talent. In addition, South Carolinian business owners enjoy a relatively low tax burden compared with the rest of the nation.
And although there are a lot of bright spots in South Carolina's business environment, it does have obstacles. Ballooning real estate costs, particularly on the coast, can make it difficult for business owners to upgrade to a larger space. And despite the increase in per capita personal income (PCPI) — a measure of how much money the average consumer makes each year — it remains far lower than the national average.
Still, South Carolinians are excited about doing business in their state and happy to reap the benefits of the state's healthy economic growth.
Stable economic growth
The Great Recession was a killer for many state economies, including South Carolina's. In the final year of the recession, South Carolina's real gross domestic product contracted by 3.7 percent, according to data compiled by the Federal Reserve Bank of St. Louis. However, once the recession lifted, South Carolina's economy kicked into higher gear. Although there was only modest growth some years, 2014 and 2015 saw 2.5 percent and nearly 2 percent growth rates, respectively. (The national average was 2.5 percent.)
Karen Moran, owner of Sweet Lulu's Bakery on Wheels, said she's optimistic about future growth in the state. "Granted, I have an extensive big-city advertising agency background and a very unique business model, but [starting a business in South Carolina] was one of the easiest things I've ever done."
According to a survey conducted by First Citizens Bank, of business owners in North Carolina, South Carolina, California and Florida, South Carolinian entrepreneurs were most likely to plan on growing their business within the next year. Seventy-seven percent of small business owners in South Carolina said they are optimistic about the direction of the state's economy over the next two to three years, and the same percentage said South Carolina is a "great place to start a small business," the survey found.
Healthy labor market
According to the U.S. Bureau of Labor Statistics, South Carolina's labor force is 2.3 million strong, with employment levels just under 2.2 million. That means the unemployment rate is 4.9 percent, which is even with the national unemployment rate. Without significant employment in an economy, dollars dry up for households and businesses. But if the employment rate is high, it can also result in stiff competition for top talent, which leads to ballooning payroll expenses as job candidates' values increase.
"Small business in South Carolina is growing rapidly; employment growth is at 2.5 percent for the state, and our unemployment is low," Scott Sharp, regional vice president at TD Bank in Charleston, told Business News Daily.
Though the state of the labor market certainly depends on the industry, in some cases, finding the right employees can still be difficult.
"Finding qualified food-and-beverage staff [is a challenge,]" Moran said. "Charleston is a foodie town, and thanks to national recognition, it's very hard to find staff. These folks have their pick of where to work."
Entrepreneurs are famously averse to high taxes, and South Carolina offers them some room to breathe. According to the Tax Foundation, South Carolina boasted a tax burden of just 8.4 percent in 2012, the eighth-lowest tax burden in the nation that year. Today, South Carolina levies a six-bracket individual income tax that tops out at 7 percent, a flat-rate 5 percent corporate income tax, and a 6 percent sales tax.
"Taxes are minimal for full-time residents compared to the Northern states," Sharp said. "The South Carolina government is extremely open and will proactively work with good companies that are willing to invest here and create jobs."
(Sometimes) high cost of living
Although there is certainly a range across the state and inland costs tend to be much lower, the often-prohibitive costs of living and working on the coast can be detrimental to young businesses. In cities such as Charleston and Myrtle Beach, prices tend to be much higher than they are inland, in cities such as Columbia or Greenville, Sharp said.
"Home prices are rising, and finding affordable housing for young college graduates is difficult," he added.
However, the cost of living does beat the national average, at about 93 percent of the expense, according to Sperling's Best Places. The trouble is that South Carolina's PCPI is also lower.
Low per capita personal income
When a slightly lower cost of living is coupled with a PCPI that's just 80 percent of the national average, the disparity becomes much more significant. Small businesses often rely heavily on the economic well-being of consumers; when consumers are doing poorly, businesses tend to do poorly as well. Although the PCPI has begun to tick upward, sluggishly, it still remains depressed and thus lowers consumers' confidence and propensity to spend money.
Resources for small businesses in South Carolina
If you're a small business owner in South Carolina looking for resources to help you move forward, here are a few organizations you might want to learn more about.
South Carolina 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 entirely free and volunteer-driven. Here are some of the chapters in South Carolina.
U.S. Small Business Administration District Offices
The U.S. Small Business Administration (SBA) offers financing 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.
South Carolina Small Business Development Centers
South Carolina hosts a number of development centers for small business. Each is dedicated to supporting the development and retention of small businesses, and helps entrepreneurs do everything from craft business plans to navigate the state's tax code. You can find your region's small business development center via the link below.
Are you an entrepreneurial organization or resource for small business owners, but are not listed here? Let us know. Contact the author at email@example.com.