Statistics show that entrepreneurship is still hot in NC, and here’s why

Applications to set up new businesses have held up strong even after factoring in the backlog of demand during the pandemic-related lockdowns.

There were more than 40,000 new business applications in the first quarter of this year. For comparison, that’s up 64% from Q1 2019, according to a WUNC analysis of Census Bureau data. Surveys from WalletHub show that much of this activity occurs in small towns. Morrisville was ranked 11th in a recent poll of the best cities to start a business.

Monthly Business Applications in North Carolina 2005-2022

    Monthly Business Applications in North Carolina 2019-2022

Monthly Business Applications in North Carolina 2019-2022

Experts say this is a knock-on effect of business shifts during the COVID-19 pandemic. Employees transitioned to a work-from-home model that didn’t require them to be on large metros. As workers migrated to the suburbs and rural areas, this created a secondary need for more services in those areas. This is partly driving the increase.

WalletHub analyst Jill Gonzalez says there are three reasons.

“Lower overhead than in big cities. Stronger relationships with customers, which I think people really value now. And this potential to be a big fish in a small pond,” she said.

These new business creations are helping to bring down the unemployment rate, which was 3.5% in March. Since 1976, when data is available through the NC Department of Commerce, the unemployment rate has only been this low in two other periods, for nine months from 1989 to 1990 and for almost two full years from 1998 to early 2000. By March, the unemployment rate was North Carolina not at 3.5% or below for nearly 22 full years.

Gonzalez says the mid-2020 economic hiatus gave people an opportunity to start their own business.

“We’ve seen during the pandemic that people have really branched out. They’ve decided they can get paid for the things they love to do,” she said.

If there’s one troubling clue in the data, it’s that according to the census, a lower percentage of new business applications are considered “high propensity” or those “having a high propensity to become payroll companies.”

Of the 42,777 new business applications in the first quarter of this year, 29% are listed as “high inclination.”

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