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Regional Matters

December 9, 2021

Rural Spotlight: Promoting Small Business Development in South Carolina

Rural Spotlight

This post is part of our new Rural Spotlight series, where we explore solutions to the economic challenges faced by rural communities in the Fifth District.

Introduction

The U.S. Small Business Administration’s 2021 Small Business Profile indicates that small businesses, defined as firms with fewer than 500 employees, make up 99.9 percent of all businesses in the United States employing 46.8 percent of all U.S. employees. Specifically in small towns and rural places, the Brookings Institution asserts that rural areas can benefit from fostering a vibrant small business and entrepreneurship ecosystem, as rural small businesses are often found to build local leadership and generate wealth that stays in the community. Small businesses are vital to local economies and communities, and they play an outsized role in small towns and rural areas.

Small business incubators grow and nurture startups and early-stage businesses to increase the potential for long-term success. With only about half of small business startups surviving five years and only about one-third surviving to 10 years, incubators can help mitigate risks by offering a startup location and business supports to fledglings. Incubators exist in both urban and rural places and are supported by local municipalities, economic development coalitions, universities, and community colleges. The Southeastern Institute for Manufacturing and Technology (SiMT) in Florence, South Carolina, and its Gould Business Incubator, is just one example of a business incubator that we encountered through our Fifth District outreach.

Florence and Darlington Counties by the Numbers

SiMT is located on the border of Florence and Darlington counties in northeast South Carolina. Florence and Darlington counties are two of seven counties in the Pee Dee region named after the Native America Pee Dee tribe and subsequently the Pee Dee Rivers. The two counties comprise the Florence Metropolitan Statistical Area (MSA), a small MSA with a total population of 204,097. The region’s largest city, Florence, has fewer than 40,000 residents. The median household income of the counties is below the South Carolina median of $56,360, with Florence County at $49,770 and Darlington County at $44,007. (See Appendix.) Based on people ages 25 to 64, Florence County’s labor force participation rate is 74.9 percent, which nears the S.C. state rate of 75.6 percent, and leads Darlington’s 69.8 percent. Florence and Darlington counties sit at the intersection of Interstate 20 and Interstate 95, halfway between New York City and Miami.

A Bold Idea With Multiple Beneficiaries

SiMT is a multipurpose facility, opened in 2007, developed by Florence-Darlington Technical College (FDTC). With an income generating event space and rental space for small businesses, the purpose of SiMT was to provide alternate income as state funding to the community college decreased. Since SiMT operates as part of FDTC, a state agency, the state governs the purchasing, procurement, and other financial activities. Sixteen full-time staff members work at SiMT, but as an entity of FDTC, they receive support from other college staff. Altogether, SiMT houses a machining facility, event venue, social media listening center that provides social media/news monitoring for businesses and organizations, a space for rapid prototyping using 3D printing, and the Gould Business Incubator. “On any given day, you may find mannequins strewn about the staircase, bathroom entrance, or front lawn as part of training for medical transport apprentices; or a bustling urban wear retailer artfully displaying their creations in the incubator; or students in a classroom down the hall from a Diversity and Inclusion conference with over 300 attendees in our event space,” explains Tressa Gardner, associate vice president of SiMT.

As of November, SiMT’s Gould Business Incubator houses 32 small businesses with seven on the waiting list. Of the 32 businesses, there are 25 African American owners, six White owners, and one Hispanic owner. Over two-thirds of the owners are female. Businesses are quite varied by industry and include four home health agencies, a speech therapist, an IT company, an insurance office, and an urban wear retailer, among others. In the incubator monthly fee, each business receives a phone line, private Wi-Fi, sign, access to a copier, mailbox, and key cards to their space. As small businesses succeed, they can grow into a larger space at the incubator and then are often eventually launched into the community. For example, the incubator was the first location for Locked Inn, an escape room. With the desire to offer four escape rooms, the owners of Locked Inn selected a location outside of the incubator and grew their business.Aroha Afro Latin Dance, the Pee Dee's only Latin Dance Studio, began at the incubator, moved, and now offers a dance studio, event rental space, and art gallery in their new location.

The incubator and SiMT are more than an office space. The incubator offers workshops, marketing consulting, guidance on attracting investors, and connections with legal, administrative, and accounting providers at no additional fee through a monthly seminar series and staff support. For example, the incubator partnered with the social media listening center, also at SiMT, to offer a workshop on social media marketing and a complimentary individual two-hour session to build a plan with each small business owner within the incubator. The incubator also offers workshops provided by community partners on preparing taxes and building a business banking relationship. Both incubator and nonincubator clients can also opt to procure the many other product development services offered at SiMT such as engineering design, CAD services, and prototyping.

Challenges

Looking across the different parts of SiMT, the event venue felt the greatest effects of COVID-19. Event rentals declined to almost zero during 2020; though, in recent months, the facility has seen an increase. Despite the decline in event income, SiMT’s portfolio of services allowed it to stay afloat with the business incubator continuing to thrive and even expand during the pandemic. They also repurposed facility space to add four new coworking spaces, which increased incubator capacity. “During the pandemic, we had two businesses that opted to work from home to conserve capital, but we were able to immediately rent the space,” Gardner explained. For example, a driver training school, which offers the required course for new drivers in South Carolina, moved into the space during the pandemic. The business, which offers an eight-hour in-person class, found that potential customers were more comfortable taking the class at the incubator than the business owner’s home. Ultimately, moving to the incubator helped keep the business headed in the right direction during an otherwise tumultuous time.

Keys to Success

Leaders at SiMT identified two keys to their success: networking and collaboration.

Networking. One client brings another client. Gardner explains that she sees the power of networking every day both as a benefit to the incubator and to the clients. The incubator environment encourages mentoring, as Gardner sees entrepreneurs encouraging other entrepreneurs to “go for it” and launch their own businesses. The incubator has helped launch four small businesses in one line of business alone. These businesses are centered around Babynet services, a program created by the South Carolina Department of Health and Human Services that incorporates a network of developmental services that helps infants and toddlers with special needs.

Collaboration. Collaboration is also key in successfully incubating 32+ small businesses.  SiMT, for example, requires college IT staff to set up the phone line, copier codes, key cards, and Wi-Fi, which are included in the space rental. It also requires a sign made to specification and an available mailbox. “Everyone is focused on trying to help these businesses be successful,” Gardner explains. Lasting partnerships are borne out of collaboration too. For example, the incubator houses a business that provides security for events. The company is finding it hard to attract and retain part-time staff. The solution is a partnership with the criminal justice program at Florence-Darlington Tech housed on the same campus.

Supports for Adapting in Other Communities

About 1,400 business incubators across the United States foster a vital small business ecosystem in both urban and rural communities. Leaders of the Gould Business Incubator tout pumping more than $20 million into the Florence and Darlington economies during the last fiscal year. They point to networking and collaboration as keys to their successes. Communities considering starting an incubator can find support in state associations. Within the Fifth District, Virginia, Maryland, South Carolina, and North Carolina have a state incubator association. As the nation recovers from the pandemic, Gardner advises her clients and potential clients, “Now’s the time to dream big.” She encourages communities considering starting an incubator to do the same.


Appendix

The following section includes demographic and economic data for Florence and Darlington Counties.

Demographic and Education Statistics

GeographyTotal Population 

% of Population Age 25-64 

% of Population (25-64) with High School Diploma or Higher 

% of Population (25-64) with Bachelor's Degree or Higher

Florence County  137,588 50.2% 87.9% 25.2%
Darlington County 66,50949.4% 85.8% 19.8%
South Carolina 5,218,040 50.9% 88.9% 28.8%
Fifth District 32,962,831 52.2% 90.2% 36.1%

Sources: U.S. Census Bureau Vintage 2020 County Population Totals, American Community Survey 2019 5-Year Estimates; author’s calculations.


Employment Statistics

Geography Employment/Population Ratio (25-64)Labor Force Participation Rate (25-64)Unemployment Rate, December 2019Unemployment Rate, December 2020
Florence County 70.5% 74.9% 2.5% 5.9%
Darlington County 65.9% 69.8% 2.9% 6.6%
South Carolina 71.4% 75.6% 2.5% 5.9%
Fifth District 74.0% 78.3% 2.5% 6.2%

Sources: U.S. Census Bureau, American Community Survey 2019 5-Year Estimates; U.S. Bureau of Labor Statistics Local Area Unemployment Statistics; author’s calculations. Note: December unemployment rates are not seasonally adjusted.

Interested in reading more articles like this one? Check out Our Regional Focus, where you can find additional research and analysis on rural communities, small business and other pressing economic issues that affect our communities.

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