Being your own boss remains record-breaking among North Carolinaans as an economic ripple effect of the COVID-19 pandemic.
46,868 new businesses launched in the first quarter surpassed the previous record of 44,930 in the first quarter of 2021 by 4.2%.
This included 1,235 in Forsyth County alone.
March yielded the third-highest month total for job creations, with 17,263 following May 2021 and June 2021.
By contrast, 26,134 businesses were created in the first quarter of 2020, which includes the first two weeks of the pandemic, with 25,605 for the first quarter of 2019.
For 2021, more than 185,000 job creation applications were submitted, compared to the previous annual record of 127,000 in 2020.
North Carolina’s secretary of state, Elaine Marshall, said the record number of businesses created was another sign that “North Carolina’s determined entrepreneurial spirit continues to show.”
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Much of the pandemic’s impact on local and state economies has focused on the overall decline of existing workers, particularly those in minimum to low-wage jobs.
“These business owners tell us in surveys that they see new opportunities to put money in their pockets and business in their communities,” Marshall said.
“These are not people who have lost their jobs and have nowhere else to go.”
Marshall said the pace of new job creation is “a huge boost to our state and local economies.”
“We are doing everything we can at the State Department to get these new business owners up and running as quickly as possible.
“We are aggressively seeking ways to help these North Carolina business owners access the many resources available to help their new ventures succeed.”
Can it last?
The proliferation of new businesses in North Carolina is understandable, but it’s probably peaking, said Michael Walden, a professor of economics at NC State University.
“During the pandemic – and with financial support – most people found time to think about their future, concluding that they wanted to start their own business,” Walden said. “Borrowing costs were also at historically low levels.
“But now I expect the rate of new jobs to start to decline with rising interest rates, a massive cut in financial support, higher costs associated with inflation, and fears of a possible recession this year.”
Keith Debbage, associate professor of geography and sustainable tourism and hospitality at UNCG, warned that the rise in job creations “absolutely contradicts the long-term downward trend of entrepreneurship levels in the United States.”
“It remains unclear to what extent the growth in new job creations is a response to opportunities or the result of imperatives such as layoffs.
“During the pandemic, local entrepreneurship may be the only viable and safe source of economic growth for many people – driven not by a nurturing entrepreneurial ecosystem but by a strategy of last resort,” Debbage said.
“The strength in business start-ups reflects growing optimism in the overall economy, particularly at the local level,” said Mark Vitner, senior economist at Wells Fargo Securities.
“Unfortunately, growth in first-quarter ventures actually catches up with last year’s growth and does not reflect the uncertainty from the Russian invasion of Ukraine and the hawkish turn in the Federal Reserve.”
During an economic downturn or a major employer recession, a surge in start-up applications is not unusual.
For example, First Union Corp. When it acquired Wachovia Corp. in 2001, approximately 1,300 local job positions were either transferred to Charlotte or eliminated within the next 24 months.
Some former Wachovians have left the area in search of similarly skilled and paid employment.
Some small businesses, particularly community banks, have gained access to former Wachovia employees who have chosen to stay either to continue raising their families or not opting for the lifestyle here.
Others started boutique small businesses or went in an entirely new direction.
This time around, the availability of federal pandemic relief compensation has given the unemployed or those on leave more time to plan their next move, including starting a job.
Also, Winston Starts, Greater Winston-Salem Inc. and there has been a surge in entrepreneurial assistance from local groups like Winston-Salem’s Innovation Quarter in the city centre.
The Innovation Quarter (IQ), for example, recently launched a business acceleration initiative that brings together entrepreneurs in the field of regenerative medicine with the RegenMed Development Organization.
The aim is to accelerate the translation of technologies known to go from bench to bedside to patients.
This proximity provides access to cutting-edge biomanufacturing equipment, industry expertise and talent to support new prototyping and commercial product development through the ReMDO Test Bed.
The first tenant is BioMedInnovations, which is moving from Raleigh to further develop its technologies for solutions for tissue and organ perfusion and preservation.
The group’s current focus is the scaled-down mobile platform known as recove, designed to extend the time that organs prepared for a transplant can travel to a potential recipient. It is following Food and Drug Administration clearance to begin focusing on the kidney transplant market.
“Joining the ReMDO Innovation Accelerator space in Winston-Salem allowed us to find collaboration, join the ReMDO Testbed with our devices, and launch faster,” said Carrie DiMarzio, CEO of the group. “We’re learning and getting feedback to improve the designs of these devices.”
“With the support of WFIRM and the many field businesses that support the field of regenerative medicine in areas such as the manufacture of reagents and diagnostics, we believe these companies can be successful in commercializing their technology,” said Gary Green, ReMDO’s director of operations.
The initiative represents the latest step for the research site and the Wake Forest Institute of Regenerative Medicine, some of which date back to the late 1990s.
In May 2020, iQ Healthtech Labs was launched, described as a physical and virtual hub at the crossroads of healthcare and technology.
The aim of the center is to shorten the development cycle of products, this time at the intersection of the healthcare and technology sectors.
The center was established to foster collaborations between IQ tenants, Wake Forest Baptist Medical Center research, traditional and non-traditional partners, commercial markets, and potential investors.
One of the recently launched entrepreneurial relief efforts is the Winston-Salem Partners Roundtable Fund.
The goal is “to provide meaningful access to capital to help early-stage companies scale.”
Fund officials are looking for companies ready to pursue seed-level investments that “but have the potential to be greater,” typically ranging from $100,000 to $300,000.
To qualify, companies must be located or commit to relocation in Winston-Salem and/or Forsyth County.
Fund officials said the initiative is “independent of industry, but would be preferred to startups in industries in which Winston-Salem has expertise.”
This includes healthcare, information technology, data analytics, clothing, education, virtual reality, automotive technology and unmanned aviation.
Selected companies will have access to the management expertise of the fund’s more than 60 accredited investors.
During a investment round, the fund may require participants to allow a representative to sit on the board or act as a formal observer.
“Some of the most innovative ideas in many industries are developed here, and our network of entrepreneurs supports the growth of these ideas into thriving companies,” says Steve Lineberger, co-founder of the fund.
For more information about the fund, see www.wsprfund.com or email Clay Johnson at email@example.com.
Meanwhile, the city of Winston-Salem is in the middle of the Small Business Plan competition, sponsored by the Office of Business Inclusion and Advancement.
The aim is to promote job creation and small businesses by helping entrepreneurs develop sound business plans. The two winners will each receive a grant of up to $5,000 in start-up costs, a possible microloan and up to $5,000 in technical assistance.
Eligible applications must be for micro-enterprises (five employees or less) located within the Neighborhood Revitalization Strategy Area. This area includes parts of the northern, southern and eastern quarters of the city.
Businesses must also create low-to-middle-income jobs or benefit low-to-middle-income residents. Staff from the Office’s Business Development Division will be available to assist throughout the competition.
The best finalists will have the opportunity to submit their completed business plans in June.
Finalists will be judged by the Small Business Credit Committee and the winner will be announced in August.