WNC’s Small Business Landscape

Western North Carolina is a favorable region in which to do business. From the state’s low startup costs and low tax rates to the region’s numerous support networks and organizations to the abundance of creatives and entrepreneurs in the area, many could think of no better place to own and operate a small business than WNC.

How to Start a Small Business in NC

Nick Hawks, founder of 1-2 Teach You and teacher with the North Carolina Community College Small Business Centers, is a long time small business owner who shared some information and insight into the significance of small businesses in the state as well as the necessary steps to take in order to create your own small business.

North Carolina is one of the best, easiest, and most popular states to start a business in, according to Hawks, because it has the fourth lowest business startup cost and the third lowest tax rate in the country. Hawks shared results from a study stating the top motivations for starting one’s own business. Forty-nine percent of people said they wanted to be independent, and 43% said they wanted to have freedom and flexibility. Other reasons included: people wanted extra income, to share their creative passion, work from home, or found an opportunity to fill a niche in a specific market.

Small businesses make up 99.6% of all businesses in the state. This represents a total of 964,280 businesses and 1.7 million employees or (45.1% of all NC employees). As of 2021, the top five industries represented by these small businesses are:

• O ther Services (excluding Public Administration) - 125,511

• Professional, Scientific, and Technical services - 120,826

• C onstruction - 116,863

• Administrative, Support, and Waste Management - 101,586

• R eal Estate and Rental Leasing94,968

Small business ownership varies by demographic group as well. Of all small businesses in NC, ownership demographics are represented by:

• Women - 44.2%

• African American - 13.6%

• Veterans - 8.4%

• Hispanics - 6.2%

• Asian - 3.8%

*Above data from the U.S. Small Business Administration Office of Advocacy.

According to the Small Business Administration, the definition of a small business varies according to industry. Some ‘small businesses’, like those described by the North American Industry Classification System as Automobile and Light Duty Motor Vehicle Manufacturing, can maintain that classification with up to 1,500 employees. Other industries, such as Fruit and Vegetable Merchant Wholesalers, can maintain that classification with up to 100 employees.

Within the 22 westernmost counties of North Carolina, for 2020, there were 172,783 businesses with nine or fewer employees. The majority of these businesses are categorized as follows:

• S-corporations - 86,224

• C-corporations - 36,208

• Individual Proprietorships - 19,280

• Partnerships - 16,560

• Nonprofit - 13,662

• Government - 346

• O ther non-corporate legal forms of organization - 503

*Above data from the U.S. Census Bureau

Survival rates of small businesses tend to be around 80% for the first year, and the number of surviving businesses declines after more years in business. After five years, 55% of small businesses are still in operation, and after 15 years, only 25% of businesses are still in operation, according to Hawks.

“The majority of small businesses fail because there is no market for what they are offering,” Hawks said. “They could also be outcompeted, face pricing or cost issues, have no business model, or use poor marketing strategies.”

Hawks said that it is important to research market needs before spending time and money with business startup costs. He said that it’s imperative to know the businesses values, mission, and target market. In addition, startups will need a business plan, name, structure, and an understanding of the products the business will handle, if applicable.

“There are always classes on how to make a business plan,” Hawks said. “Plan ahead, make sure you have the resources, do your market research, and account for startup costs.”

Examples of startup costs can include: research, opening a facility, advertising, travel costs for securing distributors or suppliers, consulting fees, fees to organize continued on next page