Entrepreneurial spirit spurring more record business creations in NC | Local

Becoming your own boss continues to hold record appeal among North Carolina residents as an economic side effect of the COVID-19 pandemic.

In the first quarter, 46,868 new companies were founded, up 4.2% from the previous record of 44,930 in the first quarter of 2021.

1,235 of them in Forsyth County alone.

At 17,263, March yielded the third-highest monthly total for business start-ups, behind only May 2021 and June 2021.

In contrast, 26,134 companies were formed in the first quarter of 2020, which included the first two weeks of the pandemic, along with 25,605 in the first quarter of 2019.

There was a record of more than 185,000 business registrations for 2021, compared to the previous year’s record of 127,000 in 2020.

Elaine Marshall, North Carolina Secretary of State, said the record number of companies formed is just another sign that “North Carolina’s determined entrepreneurial spirit continues to prevail.”

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Much of the impact of the pandemic on local and state economies has been focused on the overall decline in the available workforce, particularly those in minimum- to low-wage jobs.

“These business owners, in surveys, tell us they see new ways to put money in their pockets and jobs in their communities,” Marshall said.

“These aren’t people who lost their jobs and have nowhere else to turn.”

Marshall said the pace of new business creation “is a huge boost to our state and local economies.”

“We are doing everything in our power in the Office of the Secretary of State to get these new business owners up and running as quickly as possible.

“We are aggressively looking for ways to help these North Carolina business owners gain access to the many resources available to help them make their new ventures a success.”

Can it last?

The proliferation of new businesses in North Carolina is understandable but is likely peaking, said Michael Walden, an economics professor at NC State University.

“During the pandemic hiatus — and with financial support — people had time to think about their future, and many concluded they wanted to start their own businesses,” Walden said. “Borrowing costs were also at historic lows.

“But with rates now rising, financial support largely gone, high costs from inflation and fears of a possible recession later this year, I expect the rate of new business to fall.”

Keith Debbage, a joint professor of geography and sustainable tourism and hospitality at UNCG, has warned that the surge in business creation “certainly goes against the long-term trend of declining entrepreneurship in the US.”

“It remains unclear to what extent growth in start-ups is a response to opportunity or the result of necessity such as layoffs.

“During the pandemic, it is possible that for many people, homegrown entrepreneurship is the only viable and secure source of economic growth – triggered not by a supportive entrepreneurial ecosystem, but by a strategy of last resort,” Debagge said.

Mark Vitner, senior economist at Wells Fargo Securities, said that “strength in start-ups reflects growing optimism in the broader economy, particularly at the local level.”

“Unfortunately, the growth of startups in the first quarter actually captures the growth of the past year and does not reflect the uncertainty that has arisen from the Russian invasion of Ukraine and the radical turnaround at the Federal Reserve.”

past patterns

A surge in business formation applications during an economic downturn or major employer restructuring is not uncommon.

For example, when First Union Corp. Wachovia Corp. in 2001, about 1,300 local jobs were either moved to Charlotte or eliminated over the next 24 months.

Some former Wachovians left the area for similarly skilled and paid employment.

A few small businesses, notably community banks, gained access to former Wachovia employees who chose to stay, either to continue raising their families or out of love for the lifestyle here.

Others founded boutique small businesses or went completely new ways.

This time, the availability of federal pandemic compensation gave those unemployed or furloughed more time to plan their next move, including starting a business.

local example

There has also been a surge in entrepreneurial support from local groups such as Winston Starts, Greater Winston-Salem Inc. and the Innovation Quarter in downtown Winston-Salem.

For example, the Innovation Quarter (IQ) recently unveiled its Business Accelerator initiative, which brings together regenerative medicine entrepreneurs with the RegenMed Development Organization.

The goal is to accelerate the transfer of technology to patients, also known as the transition from the bench to the bedside.

This proximity provides access to world-class biomanufacturing equipment, industry expertise and talent to support novel prototyping and commercial product development through the ReMDO testbed.

The first tenant is BioMedInnovations, which has moved from Raleigh to further develop its technologies towards solutions for tissue and organ perfusion and preservation.

The group’s current focus is on a reduced-scale mobile platform known as Recove, which is designed to increase the time organs prepared for transplantation can be transported to a potential recipient. It is seeking Food and Drug Administration approval so it can focus on the kidney transplant market.

“Joining the ReMDO Innovation Accelerator Space in Winston-Salem has just enabled us to find a collaboration, get our devices involved in the ReMDO Testbed, and get started faster,” said Carrie DiMarzio, Group Chief Executive. “We learn and receive feedback to improve our designs of these devices.”

Gary Green, Chief Operating Officer of ReMDO, said that “We believe that with the support of WFIRM and many regional companies supporting the regenerative medicine space in areas such as reagent and diagnostic manufacturing, these companies will be able to commercialize their technologies can be successful.”

The initiative represents the latest step for the research district and the Wake Forest Institute for Regenerative Medicine, some of which date back to the late 1990s.

In May 2020, iQ Healthtech Labs debuted, described as a physical and virtual center at the intersection of healthcare and technology.

The hub aims to shorten the development cycle of products, this time at the intersection of the healthcare and technology industries.

The hub was established to encourage collaboration between IQ tenants, Wake Forest Baptist Medical Center research, traditional and non-traditional partners, commercial markets and potential investors.

Funding Opportunities

A recently launched initiative to support entrepreneurs is the Winston-Salem Partners Roundtable Fund.

The goal “is to provide meaningful access to capital to help early-stage companies scale.”

Fund executives look for companies that are willing to move forward with seed-level investments, which typically range from $100,000 to $300,000, “but have the potential to go bigger.”

Companies must be located in Winston-Salem and/or Forsyth County or have committed to relocate to Winston-Salem and/or Forsyth County to be eligible.

Fund officials said the initiative “is industry agnostic, but preference is given to startups in industries where Winston-Salem has expertise.”

These include healthcare, information technology, data analytics, apparel, education, virtual reality, automotive technology and unmanned aviation.

Selected companies are given access to the management know-how of the fund’s more than 60 accredited investors.

During an investment round, the Fund may require participants to have a representative sit on its board of directors or have a formal observer role.

“Some of the most innovative new ideas in many industries are born right here, and our entrepreneurial network encourages the growth of those ideas into thriving businesses,” said Steve Lineberger, who serves as a partner on the fund.

For more information about the fund, see www.wspfund.com or email Clay Johnson at cjohnson@winstonsalem.com.

Meanwhile, the City of Winston-Salem is in the midst of its Small Business Plan competition sponsored by its Office of Business Inclusion and Advancement.

The aim is to promote job creation and small business by helping entrepreneurs develop sound business plans. Two winners will each receive a grant of $5,000 for start-up costs, up to $5,000 for a potentially matched microloan and technical assistance.

Eligible submissions must be for micro-enterprises (five employees or fewer) located in the neighborhood revitalization strategy area. This area includes parts of the north, south, and east quadrants of the city.

Businesses must also create low- to middle-income jobs or support low- to middle-income residents. Staff from the Office’s Business Development Department will be available for assistance throughout the competition.

The best finalists have the opportunity to submit completed business plans in June.

The finalists will be judged by the Small Business Loan Committee and the winner will be announced in August.

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