Small Business: Two Views

How do small businesses rank Georgia and metro Atlanta? Pretty well. Atlanta was ranked America’s fifth friendliest city for small businesses while Georgia was the sixth friendliest state, a survey notes. Today, the founder of a small-business website explains the rankings and outlines areas that need improvement. The state director for the U.S. Small Business Administration offers her perspective on the region.

Small business plays vital role in Georgia economy

By Terri L. Denison

When I arrived in Georgia in May 2002, I quickly sensed that I had landed in the most entrepreneurially oriented place among my various tours of duty with the U.S. Small Business Administration. Many people I encountered, even casually, were thinking about starting a business, were starting a business or had an established business. Even individuals who held traditional jobs also operated their own enterprises. Statistics have supported my initial observations. Ninety-five percent of the businesses have fewer than 50 employees, with 87 percent employing five or fewer individuals. The Kauffman Foundation ranks Georgia second among states for increases in entrepreneurial activity over the past decade. The Atlanta-Marietta-Sandy Springs Metropolitan Statistical Area tied for second nationally in entrepreneurial activity among metropolitan areas.

Why is small business and entrepreneurship so prominent in Atlanta and Georgia? One of the biggest drivers is demographics. Between 2000 and 2010, Georgia’s population grew 18.3 percent and was one of only six states that experienced a population increase of more than 1 million people. Metro Atlanta was the country’s third fastest growing area during this period, with a 24 percent population increase.

An increasing population brings increasing customer demand for products and services, which, in turn, generates more opportunities for new and existing businesses. The age of the population also promotes higher levels of entrepreneurial activity. In Georgia, 63.3 percent of the population is between 18 and 64 years old, the age segment from which the vast majority of entrepreneurs comes. That percentage rises to 70.8 for Atlanta. Education levels, which have been correlated with business ownership, are also favorable, with more than 27 percent of Georgians and 45 percent of Atlantans having at least a bachelor’s degree.

Georgia has key economic generators that spur opportunities for business ownership and entrepreneurship. There are the obvious ones — Hartsfield-Jackson International Airport, the world’s busiest airport, and the Port of Savannah, the fastest growing port in the country.

These facilities are important bricks in the foundation of the state’s economic infrastructure. They draw companies of various sizes to the state and encourage new ventures. The presence of headquarters for 30 Fortune 500 and 1000 corporations in Georgia generates business opportunities for smaller businesses through their respective supply chains and ancillary activities. The state’s military installations are also sources for small-business opportunities. An emerging agritourism sector is creating more enterprise opportunities in rural Georgia.

Overall, Georgia and Atlanta consistently rank high for a pro-business environment having relatively lower taxes and regulatory requirements, lower cost of living and higher quality of life.

There is a more balanced approach to economic development policy at state and local levels by including business development along with business recruitment and retention. Entrepreneurship education is available from the state’s technical colleges as well as academic colleges and universities to foster the creation of traditional, lifestyle and high- growth “gazelle” businesses.

This week marks the 49th observance of National Small Business Week. It is an opportunity to celebrate the role of small businesses and entrepreneurs in the American economy and culture.

The past few years have been challenging with the most severe recession in a generation. Although the rate was lower during that period, we did see some entrepreneurs starting businesses. Many existing business owners found ways to reinvent their companies to survive in the short term and set the stage to be stronger and prosper in the long run. In Atlanta and across the state, small businesses have played a significant role in our economy and will continue to do so.

Terri L. Denison is Georgia district director for the U.S. Small Business Administration.

Georgia a friendly place for small business

By Sander Daniels

How friendly is Atlanta and Georgia, generally, toward small business?

Although this is a critical question that local politicians regularly confront in election years, there is surprisingly little data to answer it. However, a recently released survey shines new light on the issue.

The Thumbtack.com National Small Business Survey, conducted in partnership with the Kauffman Foundation, is a national report card of how friendly states and cities are to entrepreneurs and job creators. This survey is unique from other indexes that attempt to rank the best and worst places to do business in the United States because it goes directly to the source: the small-business owners themselves.

By drawing from the 275,000 small-business owners and managers who list their services on Thumbtack.com, we were able to capture nuances that are difficult or impossible to measure through other data sources or that are often ignored altogether.

Small businesses ranked Atlanta as the fifth-friendliest city and Georgia as the sixth-friendliest state in the nation toward small business. Small-business owners in Georgia clearly thought their state was a friendly place to do business.

Not only do we know how Atlanta and Georgia ranked nationally, we also evaluated what drives the rankings. While taxes and federal regulations often dominate discussions of what matters to business, small-business owners’ responses told a different story.

More than 6,000 small businesses nationwide participated in the survey. The message was overwhelming: Professional licensing regulations are almost twice as important to small businesses as are tax-related regulations. More than half of the survey’s respondents also were subject to special regulations, like annual licensing fees for pet sitters or monthslong permitting processes for electricians. The ease of complying with these requirements was by far the most important factor in their determination of a city or state’s overall friendliness toward small business.

Another important factor driving friendliness rankings was the availability of local networking and training programs for small businesses. The programs typically cited by survey respondents were those held by local chambers of commerce, small business development centers and Small Business Administration offices.

Small businesses gave Atlanta an “A+” and Georgia an “A” for their networking programs. Businesses graded them similarly well for their training programs.

Again and again, we heard small-business owners pining not for less government, but for smarter government. The states and cities that rated best were not necessarily those with the lowest tax rates or fewest rules. Instead, they were regions with coherent and consistently enforced licensing requirements and those that provided well-publicized training and networking programs.

Although most small businesses told us great things about doing business in Georgia, there were also strong feelings about how things could improve. The state was middle of the pack with a “B” grade for licensing regulations, with small businesses commenting that the process could be clearer and faster.

For example, a roofer complained of the hassle associated with needing a separate license for every county in which he did business. Zoning regulations were also a weak point, with both Georgia and Atlanta receiving a “B-” in the category.

Overall, however, it’s clear that small businesses see Georgia as one of the friendliest places in the nation to set up shop. As one small business owner explained: “Atlanta is a place of opportunity and the state is very supportive. You just have to be willing to work hard to push your business.”

Sander Daniels is co-founder of Thumbtack.com, a website in which you can hire help from local, pre-screened businesses.


2 comments Add your comment

nelsonho

May 24th, 2012
6:07 am

What kind of business would I set up in Atlanta or Georgia. I just don’t know.
First I would want a big, small business. I would look for one of those high tech buildings, like in Swanee where they were built brand new and 5 years later shuttered. I would know the building was in good condition. I would have a high end thrift shop. A place where the clothes were like new. Then I would have floor models to show how good the clothes look. Also, child care and coffee shop. I would get fashion people from the AJC to “puff” it up
Lastly, with a deep water harbor at Savannah, I would have all the clothes imported from India.

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