The Hilton Head Island Packet
November 16, 2020
by Sam Ogozalek
The coronavirus isn’t just forcing Beaufort County employers to furlough workers or shut down temporarily. It’s also driving a decline in new business development.
The number of new business licenses issued in some parts of the county dropped significantly year over year from April to September, according to data obtained by The Island Packet and Beaufort Gazette.
In unincorporated Beaufort County, the number of new business licenses secured by entities headquartered in the area fell roughly 37%.
“If we don’t have small businesses (that are) healthy, doing the hiring that’s needed, it’s going to be tough to get out of the recession,” said Frank Knapp Jr., president and CEO of the S.C. Small Business Chamber of Commerce.
The chamber issued a report in September warning of a drop in new business development around the state, including in Richland and Horry counties.
Following that report, The Island Packet and Beaufort Gazette requested business license data from the city of Beaufort, Beaufort County, Bluffton and Hilton Head.
Joseph Von Nessen, a research economist at the University of South Carolina, said it’s not surprising that Beaufort County municipalities saw a drop in newly formed businesses as the coronavirus spread across the state.
“Leisure and hospitality has been hit so hard, and leisure and hospitality tends to have a disproportionately large number of small businesses,” Von Nessen said. “That’s going to affect the incentive to begin to look to start a new business.”
Von Nessen noted that the state’s economy is now recovering faster than it did after the 2008 financial crisis, even if that progress has slowed since July.
Some industries, though, are faring better than others, Von Nessen said. E-commerce ventures and digital retailers are good examples.
Businesses such as mom-and-pop motels, meanwhile, are more likely to struggle amid the pandemic.
That economic uncertainty, Von Nessen said, is dissuading some people from setting out to launch a startup.
In South Carolina, that’s a big deal: Small businesses around the state employed 43.8% of the private workforce, or 817,008 people, in 2017, according to a report from the Small Business Administration that was published earlier this year.
“Firms with 20 to 99 employees have the largest share of small business employment,” the report read.
That’s why Von Nessen said the health of S.C.’s small businesses is crucial to economic recovery efforts.
“It’s pretty serious,” Knapp said of the drop in startups.
Knapp said new business creation around the U.S. had already fallen prior to COVID-19. One study published by the Brookings Institution found that America’s economy had steadily become “less entrepreneurial” from 1978 to 2011, taking into account U.S. Census Bureau data showing a decline in new businesses.
Sen. Tim Scott (R-S.C.) and Sen. Amy Klobuchar (D-M.N.) early last year launched the bipartisan Senate Entrepreneurship Caucus, aiming to “diagnose the causes of this ‘startup slump.’”
The pandemic has only exacerbated the issue, Knapp said.
“It’s going to take longer to reverse the trend of fewer new business startups,” he said.
‘I LOVE TO WORK’
It’s not all bad news. Von Nessen said there’s been an uptick in new applications for federal Employer Identification Numbers. South Carolina has recorded a 36.7% year over year increase in EIN requests, mirroring a national trend, according to U.S. Census Bureau data current as of Thursday. EINs are unique business identifiers used by the Internal Revenue Service.
There are positive signs in the local data, too.
Bluffton, for example, saw no percentage decrease or increase in new licenses issued year over year from April to September for businesses located within town limits, data show.
While newly obtained licenses dropped roughly 17% year over year in Bluffton from April to July, August and September marked a rebound.
And despite the falling numbers, there are still new businesses being formed elsewhere in the county.
Jake Ranney, 35, of Hilton Head, incorporated a new home renovations company in April, state business records show. He also got a business license from the town.
“The pandemic just gave me the free time to do it,” said Ranney, owner of Crafted by Jake Inc.
Ranney had already been working in the construction industry as the owner of Carolina Company LLC, but decided he needed to revamp his business model.
“My company philosophy went from being busy to making money,” he said. “My goals for the first year or two was just being busy. I just took anything and everything that came my way, it seemed like, whether it made me money or not.”
Na’Zari Garvin, 10, of Hilton Head, is also trying her hand at managing a new business.
Garvin’s mom helped her and her 13-year-old sister, Tiannah, set up Z&T Sassy Gloss LLC earlier this year. The company was incorporated in August and also received a business license from Hilton Head.
The two sisters are making lip gloss and selling it at events around the area, including in Bluffton and Savannah.
The company’s signature color is “lightish baby pink.”
“I love to work, and I love lip gloss. So it gave me the idea that I wanted to start my own business,” Garvin said.
Her mom, Lakia, recalled Garvin asking if they could make lip gloss on Mother’s Day. Things took off from there.
In an interview last Monday, Garvin had advice for entrepreneurs worried about the pandemic:
“Don’t give up, go forward, keep going, start ordering, start making business cards, find events, go advertise yourself.”
Read more here: https://www.islandpacket.com/news/rebuild/article247143901.html#storylink=cpy