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New study points to a way for economic development in Beaufort County
By: Beaufort Observer Editorial Team ( More Entries )
Publisher's Note: This article originally appeared in the Beaufort Observer.
As Beaufort County and the City of Washington consider the direction their economic development programs will take now that Tom Thompson has resigned, it might be instructive for them to consider a new study done by Thumbtack.com for the Kauffman Foundation. The study compared states in relation to several criteria viewed by small businesses as important in facilitating the growth and development of small businesses.
The reason small business is important is simple: They produce the majority of jobs in any county. The study reports that 65% of all new jobs between 1993 and 2009 were created by small businesses. And other studies have shown that the majority of small businesses are in the service sector as opposed to the manufacturing sector.
Those two facts alone show where Beaufort County, under the current leadership, has made strategic mistakes. While our leaders have focused on bringing in large manufacturing firms, the areas of the state and nation that have done best have focused on helping entrepreneurs start and grow small businesses that most often offered a services rather than produced a product.
Nowhere is this strategic error by Beaufort County more obvious than in the medical services industry. With the growth of the medical complex centered in the ECU School of Medicine, most of the real growth in economic development in the region has come in the medical sector. The Beaufort Economic Development Commission and its non-profit partner, the Committee of 100, have focused more on boatbuilding than on allied health services. As a result, the recession, which hits more highly cyclical industries such as boatbuilding, has hurt Beaufort more than it has hurt other counties.
So the question, if our leaders are going to rejuvenuate economic development in Beaufort County, becomes: What can government do to be most effective in promoting economic growth (of existing businesses) and development (bringing in new businesses)?
That's were studies like the Thumbtack Study can be informative. This study surveyed over 6000 small businesses nationwide to find out what business owners think should be done and where different locations are doing relatively a better job. Here's what they found as reported by the News & Observer:
The survey found that North Carolina ranked 26th in overall small-business friendliness with Thumbtack giving it a grade of C plus. North Carolina was ranked 27th in the ease of starting a small business, giving a grade of C. It was graded 10th in the cost of hiring a new employee, giving it a grade of A minus. It was ranked 31st in regulatory friendliness, giving it a record a grade of C minus. It was ranked 27th in friendless of health and safety regulations or grade C. It was ranked 38th in friendliness of employment, labor and hiring regulations or a grade of D.
North Carolina was ranked 34th in friendliness of tax code for a grade of D plus, 33rd in friendliness of licensing regulations or C minus, 25th in friendliness of environmental regulations or C plus, 25th in zoning regulations or C plus, 38th in publicity of training programs or a D; 25th in publicity of networking programs or a C plus, 27th in current economic health of small business, 25th in change in revenue over the past 12 months, and 22nd in forecast of small business's future economic health.
In regional rankings, Texas is first while North Carolina is next to last ahead of only Florida.
But how North Carolina ranks is very much irrelevant to Beaufort County. That is true simply because of the differences within North Carolina moreso than the differences between our state and others. When you look at the results within North Carolina you see a very divided picture.
Click here to see the results based on regions within the state. Not surprisingly, Eastern North Carolina, and more particularly northeastern North Carolina ranks dead last, with Beaufort County sitting in the very center of the depression. To put it another way, if you were going to start a small business northeastern North Carolina is not the place you want to do it.
So the issue becomes: What can/should our leaders do to change the attractiveness of Beaufort County in order to foster economic growth and development? What business owners said was:
1. Lower taxes on small businesses
2. Improve the workforce, with an emphasis on training programs
3. Reduce regulations, particularly regulations that make it more difficult to start a small business
4. Reform the licensing requirements
5. Reform the health and safety, environmental and zoning requirements
6. Improve networking programs that make accessing information and assistance easier for small business owners
If it is not readily apparent in the list above, we would point out that four of the six tactics that could be used can be lumped together into a category that says simply: Government should stop hurting businesses. It should do so by lowering the cost of starting and doing business and get off the backs of small business. The other major tactic is improving the quality of the work force. And finally, one of the things that the EDC has done very little of is helping small businesses find information and resources they can use to grow their enterprise.
For example, assistance in finding and gaining financing is, as some small business owners said, the absolutely most critical help they need. "Without capital, you can't do anything," is the way one put it. To get capital small businesses need information and data. They need solid market analysis. They need help in putting together business plans that will attract competitive bidding by financing entities. They need help in access government programs that help gain financing from the private sector. They need banks and bankers in the local community who are committed to helping businesses succeed rather than simply making the most money on a particular deal.
Commentary
When one assesses the various reports the EDC/Committee of 100 in Beaufort County have put out in the last decade one thing becomes glaringly obvious: We have been swimming up stream. Almost all of the resources have been devoted to the wrong economic sector (manufacturing) with almost none of those resources going to where the real jobs are being created...the service sector with small firms.
And the reports seldom mention anything the EDC/C of 100 has been doing to get government off the backs of small business people. Very little is said about improving the work force. But worst of all, there is nothing--literally nothing--in the most recent reports about anything the EDC/Cof100 has done to help small businesses gain need capital.
While our industrial parks sit mostly empty and going downhill, one small entrepreneur's comment to us summarizes, we think, the failure of the EDC/Cof100 over the last decade: "Give me a few good workers and a little help to get the capital I need and I can create jobs...many more jobs than I have been able to do in recent years. And me and my employees would be paying more taxes and buying more from other local businesses if they would just get off by back and take their hand out of my till."
Go Back
As Beaufort County and the City of Washington consider the direction their economic development programs will take now that Tom Thompson has resigned, it might be instructive for them to consider a new study done by Thumbtack.com for the Kauffman Foundation. The study compared states in relation to several criteria viewed by small businesses as important in facilitating the growth and development of small businesses.
The reason small business is important is simple: They produce the majority of jobs in any county. The study reports that 65% of all new jobs between 1993 and 2009 were created by small businesses. And other studies have shown that the majority of small businesses are in the service sector as opposed to the manufacturing sector.
Those two facts alone show where Beaufort County, under the current leadership, has made strategic mistakes. While our leaders have focused on bringing in large manufacturing firms, the areas of the state and nation that have done best have focused on helping entrepreneurs start and grow small businesses that most often offered a services rather than produced a product.
Nowhere is this strategic error by Beaufort County more obvious than in the medical services industry. With the growth of the medical complex centered in the ECU School of Medicine, most of the real growth in economic development in the region has come in the medical sector. The Beaufort Economic Development Commission and its non-profit partner, the Committee of 100, have focused more on boatbuilding than on allied health services. As a result, the recession, which hits more highly cyclical industries such as boatbuilding, has hurt Beaufort more than it has hurt other counties.
So the question, if our leaders are going to rejuvenuate economic development in Beaufort County, becomes: What can government do to be most effective in promoting economic growth (of existing businesses) and development (bringing in new businesses)?
That's were studies like the Thumbtack Study can be informative. This study surveyed over 6000 small businesses nationwide to find out what business owners think should be done and where different locations are doing relatively a better job. Here's what they found as reported by the News & Observer:
The survey found that North Carolina ranked 26th in overall small-business friendliness with Thumbtack giving it a grade of C plus. North Carolina was ranked 27th in the ease of starting a small business, giving a grade of C. It was graded 10th in the cost of hiring a new employee, giving it a grade of A minus. It was ranked 31st in regulatory friendliness, giving it a record a grade of C minus. It was ranked 27th in friendless of health and safety regulations or grade C. It was ranked 38th in friendliness of employment, labor and hiring regulations or a grade of D.
North Carolina was ranked 34th in friendliness of tax code for a grade of D plus, 33rd in friendliness of licensing regulations or C minus, 25th in friendliness of environmental regulations or C plus, 25th in zoning regulations or C plus, 38th in publicity of training programs or a D; 25th in publicity of networking programs or a C plus, 27th in current economic health of small business, 25th in change in revenue over the past 12 months, and 22nd in forecast of small business's future economic health.
In regional rankings, Texas is first while North Carolina is next to last ahead of only Florida.
But how North Carolina ranks is very much irrelevant to Beaufort County. That is true simply because of the differences within North Carolina moreso than the differences between our state and others. When you look at the results within North Carolina you see a very divided picture.
Click here to see the results based on regions within the state. Not surprisingly, Eastern North Carolina, and more particularly northeastern North Carolina ranks dead last, with Beaufort County sitting in the very center of the depression. To put it another way, if you were going to start a small business northeastern North Carolina is not the place you want to do it.
So the issue becomes: What can/should our leaders do to change the attractiveness of Beaufort County in order to foster economic growth and development? What business owners said was:
1. Lower taxes on small businesses
2. Improve the workforce, with an emphasis on training programs
3. Reduce regulations, particularly regulations that make it more difficult to start a small business
4. Reform the licensing requirements
5. Reform the health and safety, environmental and zoning requirements
6. Improve networking programs that make accessing information and assistance easier for small business owners
If it is not readily apparent in the list above, we would point out that four of the six tactics that could be used can be lumped together into a category that says simply: Government should stop hurting businesses. It should do so by lowering the cost of starting and doing business and get off the backs of small business. The other major tactic is improving the quality of the work force. And finally, one of the things that the EDC has done very little of is helping small businesses find information and resources they can use to grow their enterprise.
For example, assistance in finding and gaining financing is, as some small business owners said, the absolutely most critical help they need. "Without capital, you can't do anything," is the way one put it. To get capital small businesses need information and data. They need solid market analysis. They need help in putting together business plans that will attract competitive bidding by financing entities. They need help in access government programs that help gain financing from the private sector. They need banks and bankers in the local community who are committed to helping businesses succeed rather than simply making the most money on a particular deal.
Commentary
When one assesses the various reports the EDC/Committee of 100 in Beaufort County have put out in the last decade one thing becomes glaringly obvious: We have been swimming up stream. Almost all of the resources have been devoted to the wrong economic sector (manufacturing) with almost none of those resources going to where the real jobs are being created...the service sector with small firms.
And the reports seldom mention anything the EDC/C of 100 has been doing to get government off the backs of small business people. Very little is said about improving the work force. But worst of all, there is nothing--literally nothing--in the most recent reports about anything the EDC/Cof100 has done to help small businesses gain need capital.
While our industrial parks sit mostly empty and going downhill, one small entrepreneur's comment to us summarizes, we think, the failure of the EDC/Cof100 over the last decade: "Give me a few good workers and a little help to get the capital I need and I can create jobs...many more jobs than I have been able to do in recent years. And me and my employees would be paying more taxes and buying more from other local businesses if they would just get off by back and take their hand out of my till."
Comment
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June 19, 2012 | 08:39 AM
With respect to discussions on the city council about utility rates versus customer usage: the electric rate is overwhelmingly important.
The point of generating electricity is to make the product affordable to consumers for a wide and growing number of uses. Lower rates encourage new commercial and residential users and greater economic development in the community being served. The single best indicator of economic well being in a modern community is strong and rising use of electricity.
Electricity rates are the "elephant in the room" concerning economic development in Beaufort County. Businesses are acutely aware of all manufacturing costs. They are already actively involved in restricting needless uses of electricity at their facilities. Plant managers, manufacturing process designers, selection of efficient machines and motors which are scaled to their best need all contribute to best use of only essential KWH useage. However, various manufacturing processes do have their own most efficient and particular basic KWH requirements and that cost is controlled only by the utility rate.
Our rates are an all prevailing hurdle to our local economy. New business is deterred from locating here. Old businesses are at a disadvantage to competitors being served by lower rate utilities. Residential customers need to direct dollars to utility bills which could go to home repairs. This results in a depreciating housing stock. The distortions to the local economy are all intrusive and pervasive. No amount of EDC scheming or industrial park nonsense can overcome the burden of utility rates. What new development does come to Beaufort County seeks out areas served by alternate power providers.
While it is a service to customers to educate users as to "smart use" strategies, it is not the government or the generating company's place to discourage usage. Discouragement of usage leads to two problems:
1) As utility usage falls the limited KWH hours generated and sold become less able to spread the fixed costs of plant and equipment across a broad sales revenue base. This causes the portion of fixed costs allocated per KWH to rise, this in turn requires moth balling plant and equipment or increasing rates.
..this is a death spiral for business and for customers.
2) The logical progression for reduced customer usage through recommended thermostat settings, etc., is for the regulators to move into mandated temperature settings and then onto rationing. Regulation by central authorities replaces business and personal decision making
..this is the death spiral of the business environment.