July 25, 2014
S.C. Small Business Chamber of Commerce
Special to Statehouse Report
JULY 25, 0214 — The unemployment rate in South Carolina is holding steady at 5.3 percent. That’s good news since it was at 11.9 percent five years ago. In fact our state ranks 11th in job creation from June 2009 to June 2014 adding 7.1 percent more jobs in that time.
However, all is not well with our state’s economy. The U.S. Census Bureau has a new report out saying that 35.2 percent of us live in “poverty areas,” communities with at least 20 percent of our neighbors living in poverty. That shocking figure is up from one out of five South Carolinians living in “poverty areas” just 10 years ago. (Read recent Statehouse Report story on poverty areas.)
Obviously we need more jobs but generating them by trying to attract more large manufacturers to the state isn’t the best plan. S.C. Gov. Nikki Haley acknowledged this recently saying that we should now be training our unemployed to work at our existing businesses and the state should be helping these businesses expand.
But the fact is that while recruiting and retaining larger manufacturers has been somewhat successful in South Carolina, we still have ever growing “poverty areas.” Simply adding to the worker rolls of our current manufacturers will not change this trend.
What we need is a new emphasis on job creation, one that increases jobs on every Main Street in our state and that can more easily impact our geographically dispersed “poverty areas.”
Nationwide, most net new jobs, according to the Kaufman Foundation, are created by businesses less than five years of age. Most of these are, naturally, small businesses. These small businesses and start-ups can grow anywhere. They are mobile, entrepreneurial driven, and if technology-based, can be created anywhere in the state.
We have the entrepreneurs who want to start businesses and small business owners who want to grow. But what we don’t have is the access to capital that these job-creators need.
Traditionally start-ups and small business owners bankroll themselves with their own money or money from relatives and friends. Some are fortunate to obtain a loan from a financial institution. But there are many more who cannot generate the funds personally or a loan is not possible due to the lack of personal collateral or the lender is not willing to provide the amount of money needed.
Credit cards, friends, family and financial institutions aren’t sufficient to grow the numbers of small business job-creators that we must have. We need to invigorate and create alternative new funding mechanisms to launch hundreds of start-ups and expand small businesses that are waiting to grow in every county in this state.
So where will the money for these businesses come from?
You and I have always heard that South Carolina is a poor state. But the reality is that we have large sums of money in the hands of private citizens of every income bracket who religiously send their investment money to Wall Street. Tapping into these assets is the key to really growing our economy from the bottom up and raising the per capita income of all South Carolinians.
To do this, we need to create in South Carolina a culture of investing locally. If we encourage and make it easy to keep in our state just 5 percent to 10 percent of private investment funds, we can change the dynamics of our local and state economies. We can create jobs in every county, in every “poverty area” and even in the severely economically depressed I-95 corridor where 80 percent or more of our fellow citizens live in “poverty areas.”
We can turn every South Carolinian into an investor or lender. Some of the vehicles to do this are already legal and available. Others are on the way.
EDITOR’S NOTE: Knapp will write more about “Creating a Culture of Investing Locally” in a coming issue.
Knapp is the president and CEO of the South Carolina Small Business Chamber of Commerce and the recipient of the Small Business Administration’s 2014 South Carolina Small Business Financing Advocate of the Year.