NC’s small business surge supports Biden’s ‘build from the middle’ economics | Opinion

Elaine Marshall, North Carolina’s Secretary of State since 1997, thought she knew the patterns of new businesses registering with her office, but starting in mid-2020 she saw a puzzling change.

“June of 2020 was when the rocket started shooting up,” she said.

Amid the disruptions of the pandemic, the numbers surged. Filings in 2021 set a record at 178,300. Last year’s filings nearly matched that peak. Since 2019, new business creations in North Carolina are up by more than 70 percent.

Marshall’s office began a survey, she said, “to find out what was going on.” More than 4,000 people responded.

The results revealed that many new businesses were being launched by women and minorities, with low-income counties in eastern North Carolina showing major upticks. Some people were looking for ways to balance work and child care. Some had lost jobs and learned new skills. Some were turning a hobby into a business. About 15 percent said they would be hiring employees.

“There are a lot of folks who really want to be their own boss,” Marshall said.

Of course, that’s not a new feeling, but the pandemic has created new opportunities to act on it. The American Rescue Plan Act has provided more than $6.6 billion for small business expansion and the worker shortage has given individuals confidence that if a venture fails, they can find a job.

The trend is a national one. The U.S. Census Bureau reports that 10.4 million new businesses were formed in the U.S. in 2021 and 2022, the highest two-year total on record.

There are a lot of unknowns about this surge, especially how long it will last and how many of the startups survive. But it may well be an indicator that President Joe Biden is moving the nation away from “trickle-down” economic policies of tax cuts and deregulation that benefit corporations to a “build from the middle out” approach that favors middle-class entrepreneurs.

In Raleigh, Amanda Buck, 36, is part of that trend. A veterinary technician, she will launch her own pet care business – Walks + Whiskers – on March 1.

“This is something I’ve been thinking about for years,” she said.

A strong job market provides a backup as Buck sets out on her own. “My field is very short-staffed,” she said. “So, if I need to get a job, I can find one. That’s a very big plus for me.”

Anne Shaw, state director of the Small Business Center Network, an agency within the state’s community college system said, “North Carolina is just a hotbed for entrepreneurship right now.” It’s part of what she called a “great reset” as the people look for more autonomy in their work.

“I do believe we have had a fundamental shift in terms of how people look at the work that they do and how they want to live their lives and that is translating into an economic shift,” she said. “Whether that is temporary or long term, it will take a long time before we are able to see that.”

Marshall is encouraged by so many people starting their own businesses, but she’s worried about how many will make it. She said 25 percent of new businesses fail in the first three years and 50 percent end within seven years.

“We want to improve those odds,” she said.

One problem with people going into business on their own, she said, is that they often have passion, but lack planning. Most people surveyed by her office said they relied on the Secretary of State’s registration process for information on how to get started, but Marshall said they also need help with business plans and funding options. Her office has set up a new business checklist to make those starting out aware of the many state services that can help.

Marshall is still not sure what’s behind this burst of new businesses, but she knows it’s still happening.

“January’s numbers were the highest for January ever,” she said. “We were just a few shy of 60,000 new entities. So this year’s off to a robust start.”

Associate opinion editor Ned Barnett can be reached at 919-829-4512, nbarnett@ newsobserver.com