RALEIGH – According to data from the North Carolina Secretary of State’s business registration division, more new business creation filings occurred in 2021 than in any other prior year on record: 178,300.
The total number of new businesses formed in 2021 far outpaced the prior record, set in 2020. That year, 127,000 new businesses were formed.
By September 13, 2021 the Secretary of State’s office had processed more business formation filings than in all of 2020, WRAL TechWire reported.
“North Carolina is a hot bed of folks eager and willing to make their own way no matter what the pandemic throws their way,” said North Carolina Secretary of State Elaine F. Marshall, in a statement shared with WRAL TechWire this week. “North Carolina is a place where people want to do business, and we are doing everything we can to help them turn their dreams into dollars in their pockets.”
Understanding North Carolina’s newest entrepreneurs
The Secretary of State’s office surveyed new businesses formed one, two, and three years ago, to assess how entrepreneurs were choosing to form their businesses, and to gather additional data and information about their firms. 90% of survey respondents indicated their business was still operating, with 50% of the survey respondents reporting revenues of more than $25,000 annually and 9% of respondents reporting revenues in excess of $500,000 annually.
With more than 400,000 companies started within the prior three years, approximately 36,000 new companies would be generating half a million dollars in annual revenue. That’s based on the 9% self-reported rate identified by the survey, pointed out Thom Ruhe, the president and CEO of NC IDEA.
“What is the collective economic impact of that,” said Ruhe, when it comes to state revenues, job creation, and economic development. “The economic impact to the state is massive but we don’t have incentives, support and attention span commensurate with that impact.”
Of those who responded to the survey, 65% noted they were starting their businesses to pursue new opportunities, compared to 9% who reported they were starting a business as the direct result of job loss, a spokesperson for Marshall said.
Not all entrepreneurs form growth companies
“Folks want the flexibility that being their own boss allows for them,” said Marshall in an interview with WRAL TechWire. “Employment demands have caused a great deal of conflict in their lives, and they want to be a good deal more stress free.”
North Carolina is also a state that offers a great environment for new businesses, said Marshall. “People realize that they can be a service provider,” said Marshall, noting that this is leading many employees of businesses to set out on their own. “Employment demands have caused a great deal of conflict in their lives, and they want to be a good deal more stress free.”
Plus, one of the byproducts of spending more time at home in 2020 and in 2021 is that people developed additional skills and interests, said Marshall. That could be a factor for entrepreneurs choosing to pursue a new business, Marshall said.
Another factor is that programs across the state that support entrepreneurs, like community college programs are providing additional information, guidance, and training that is helping individuals consider entrepreneurship as a viable path forward, she noted.
Marshall cited Scotland County as an example of where there’s a particular growth in entrepreneurship, with a growth rate of 211%. Marshall said that her office looked into what was occurring on the ground, and the community college had expanded its program to provide business formation guidance and opportunity as a part of the trucking and logistics program.
Sure enough, many new businesses in Scotland County were in trucking or logistics, Marshall said.
A ‘new era’ of entrepreneurship
In 2022, Marshall is anticipating even further acceleration of business formation, including in the state’s rural counties, in part buoyed by new economic development activity, such as the announcement from Toyota that they will construct a $1.29 billion electric battery plant in Randolph County, or Amazon’s new facility in Johnston County, or other new facilities or expansions in regions all across the state.
“We’re into a new era of entrepreneurship, just from the historical data from the last two years, but I think it’s going to continue, because there will be so many opportunities,” said Marshall.
If the preliminary data from the first part of 2022 are any guide, the state is on pace to yet again break the record for new business creation.
“We’re only thirteen days into the new year, but we’re running ahead of last year,” said Marshall. “All due credit goes to the credit of the staff of the Secretary of State’s office,” she added. “We would have drowned, would have broken, with the increased volume, if not for the efficiencies that Web Wizard gave us.”
That’s a digital tool that the business registration department launched. The Web Wizard helps North Carolina’s citizens form their businesses and file their registration, which the office said resulted in “vastly speeding the pace of new business approval” in a statement.
“Our goal is for businesses to get up and running as soon as possible and to give them every opportunity to be successful,” said Marshall. “These technology advances have made it easier for businesses and have allowed the agency to keep up with the torrid pace of filings.”