With a strong percentage of new companies starting in the last year and low unemployment rates, the three largest metropolitan statistical areas in South Carolina ranked in the top half of cities to start a business in 2017.
According to the study, out of 358 metro statistical areas, Charleston-North Charleston ranked No. 82, Columbia came in at No. 154 and Greenville-Mauldin-Anderson was No. 185. Myrtle Beach-Conway-North Myrtle Beach was No. 144 while Spartanburg was No. 277, Sumter was No. 310 and Florence was No. 340.
The study, conducted by HeroPay and the HeroPay Academy, was compiled looking at locally-sourced data from a combination of federal agencies and non-governmental organizations such as the U.S. Census Bureau, American Community Survey, Business Dynamics Statistics, Tax Foundation and Bureau of Labor Statistics, as well as surveying 150 business owners across the country, according to HeroPay founder Hiro Taylor.
“The survey gave us an idea of how important labor costs and taxes were to small business owners, and we adjusted for ‘softer’ quality of living factors like commuting time to work and diversity,” Taylor said, in an email to GSA Business Report. “From there it was a practice in statistical modeling, weighting the contributing factors, assigning percentiles to the data within the data set, and producing an overall score.”
Four of the MSAs in South Carolina came in with unemployment rates under 4% and the Charleston-North Charleston MSA had the highest median household income at $56,430. Columbia’s average was $51,369 and Greenville-Mauldin-Anderson had an average household income of $48.180. Charleston-North Charleston and Greenville-Mauldin-Anderson both had unemployment under 4% while Columbia’s average unemployment rate was 4.5%. The Myrtle Beach MSA and Spartanburg MSA were the other two areas with average unemployment below 4%.
What made the Charleston MSA stand out, according to Taylor, was the percentage (8.2%) of new firms started in the market in 2016. In South Carolina, the next closest percentage was 7.7% in the Myrtle Beach MSA. The Las Vegas, Nev. area had the largest percentage — 12.1%
“New businesses in Charleston are well represented relative to other cities in the U.S.,” Taylor said. “This is most likely a follow-on effect of a great cost of living and a friendly tax environment in the area.”
In the Greenville MSA, the stand-out statistics were the lower-than-average real estate taxes and housing costs, both were in the top percentiles in the state and the nation.
“Greenville’s low real estate taxes (88th percentile) and low housing costs (80th percentile) translate into an attractive business environment for new businesses focused on cost savings,” Taylor said.
The most expensive areas to live in the country were San Jose, Calif., San Francisco, Washington, D.C., Santa Cruz, Calif., and Oxnard, Calif. But, Elliot Schreiber, faculty member with the College of Business at Florida Atlantic University, said on HeroPay’s website that cost of living was becoming less and less of an issue for employers.
“The top world cities for business also tend to be among the most expensive,” Schreiber said. “When we were a manufacturing society, cost of living mattered far more than it does in the knowledge economy.”
Conversely, the San Jose, Washington, D.C. and San Francisco MSAs were the top three in the highest income category.
For Columbia, Taylor said the biggest bright spot in the survey was the tie back to the University of South Carolina. He said access to that kind of a resource was a strong factor among business owners.
“The University of South Carolina gives business owners access to a large pool of well-educated potential employees,” Taylor said. “Thirty-three percent of small business owners cited this as an important aspect to their businesses in 2017.”
Regionally, the study concluded the best states to start a business in 2017 were in the upper Midwest — including Nebraska, North and South Dakota, Wyoming (of which Cheyenne was rated the No. 1 city to start a business) and Missouri. States in the South, including Alabama, Georgia, South Carolina and North Carolina, were ranked lower than average while Florida, Kentucky, Virginia and West Virginia were all average or above.