Business is booming in North Carolina

By Erica Batten.  North Carolina ranked 12th in WalletHub’s recent “2018 Best States to Start a Business” report. The study compared the 50 states across 25 key indicators of startup success to determine the most fertile ground in which to launch and grow a business. The indicators were grouped into three key dimensions: Business environment, access to resources and business costs.

Lake Norman Economic Development Executive Director Ryan McDaniels said he thought the Tar Heel State would have received a higher ranking, especially given that Forbes had recently ranked North Carolina as the best state for business.

“The factors [of the WalletHub study] seemed reasonable,” said McDaniels. “But it is difficult to compare factors that impact all startups. For instance, labor costs may not impact a startup until the company grows enough to need staff.”

The WalletHub study used average length of the work week, average growth in the number of small businesses, growth of business revenues, industry variety and five-year business survival rate to assess states’ business environments.

Access to resources was evaluated through a combination of total annual value of small business loans, venture investment per capita, unemployment rate, higher education assets, the share of population with a college degree, and the share of the population of working age, 16-64.

The study did not appear to consider natural resources, transportation and other infrastructure resources.

“We have natural assets that most communities would only dream of,” said Robert Carney, executive director of Cabarrus Economic Development, the economic development agency for Cabarrus County and its five municipalities including Concord, Kannapolis, Harrisburg, Midland and Mount Pleasant.

“We’re attractive to businesses that want both urban and rural lifestyle options,” Carney said. He also cited quality school systems, a large high-quality workforce and low taxes among the region’s assets.

“Our community is appealing for talented business leaders who are attracted by the small town charm with easy access to urban amenities and a world-class airport,” McDaniels said of the Lake Norman region.

He also said that Cornelius, Davidson and Huntersville have adjusted “numerous regulations,” including signage standards and location restrictions, in order to facilitate business.

WalletHub evaluated business costs by the availability of office space, labor costs, employee insurance premiums, corporate taxes, cost of living and incentive spending.

But local and state governments must be cautious about offering incentives, said Al Danto, a lecturer at Rice University who was also consulted in the WalletHub study.

“Authorities must develop a clear strategy for understanding what types of businesses are the right fit [for the region] and in turn build an ecosystem that will attract these businesses. Incentives, tax cuts and other concessions must be used in the context of an overall long-term strategy,” Danto said.

Russ Rogerson, executive director of the merged Iredell County/Mooreville economic development organization, said that incentives are necessary for attracting businesses. “We should strike a balance of investment, incentives and jobs,” he said.

Peter Lorenzi, professor of management at Loyola University’s Sellinger School of Business, said incentives such as targeted tax breaks are often “arbitrary and excessive, tailored to new businesses and often disrespectful of current businesses. Broad, across the board enhancements of tax and regulatory conditions are a better idea,” he said.

Carney said Cabarrus Economic Development interprets global market conditions for the local community. “That strategy changes as market conditions change and the community changes,” he said.

Even with strategic economic development and inherent assets, local regions face challenges. Having site-ready product, utilities and workforce are ongoing challenges in the Cabarrus region, Carney said.

In Lake Norman, space is an ongoing challenge to new business. However, McDaniels said, the Jay Hurt Hub for Innovation and Entrepreneurship at Davidson College, commonly called Hurt Hub @ Davidson, is an example of how the community can provide space to support entrepreneurship.

The 23,000 square foot building, formerly part of the old Davidson Cotton Mill, is now home to open meeting areas, 15 office spaces, a virtual reality lab, and other collaborative spaces where business ideas can take root.

Incubators, along with most resources, are tied to location, and economic development efforts are naturally focused on their respective regions. When businesses fail, poor location is often cited as a major factor.

But wealth and business opportunities are less anchored to geography than they have ever been, said Lorenzi. This shift suggests that forward-thinking regions will continue to think holistically about creating environments that are attractive to people, not just businesses.

McDaniels agrees. “All three towns [in the Lake Norman region] desire to have continued job and investment growth, and allow local residents to work, live and play in our community,” he said.

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