New business formations in the Show-Me State are on the rise and home-based startups are front and center across the state, according to the latest data from the Missouri Department of Economic Development.
In 2012, Missouri recorded 15,969 new business starts, a 4.2 percent uptick from 2011 and 18.4 percent greater than 2010.
Home-based, or private household startups, accounted for 28 percent of all formations – more than any other category.
Professional, scientific and technical services accounted for 12 percent of all new businesses, the second most prolific in the state.
In Greene County, 580 new businesses launched in 2012, up from 549 in 2011.
The county’s 5.6 percent increase outpaced the state average, and Greene was the fourth-highest county in total business starts behind St. Louis and Jackson counties.
Among the area companies feeding into the business growth rate were Bombay Tan Co. in Nixa, Pappo’s Pizzeria and Dublin’s Pass Irish Pub in downtown Springfield, and CPR Services of the Ozarks on the south side.
Right at homeTheresa Carter is continuing the home-based trend this year. In late March, she was awaiting her tax identification number to officially launch RosAmungThorns LLC, a floral design shop out of her north Springfield home.
An employee of Linda’s Flowers spanning two decades, Carter said former clients convinced her to start her own business after they learned she was asked to resign.
“I never intended to start my own business when I left. Three days after I left, with the phone calls and emails and people throwing their business at me, I thought, ‘I can do this,’” Carter said, adding she left the company amicably March 1.
Carter opted to start the business out of her home to keep overhead down as she works to build a book of business. While receiving advice from a Score business mentor about the proper state filings, Carter spent about $500 on startup costs.
“There are some things that I’ve had to get – basic supplies that when you work for another shop you take for granted,” she said, noting friends have helped her locate a workshop table and glassware, among other items.
John McKearney, one of 30 Springfield Score mentors advising small-business owners and potential entrepreneurs, estimated about 20 percent of startups in the Springfield area are home-based businesses.
The nonprofit performed 900 one-on-one meetings with business owners and potential entrepreneurs in 2012.
Following the economic downturn, McKearney said Score mentors fielded numerous calls about starting a business. During the last couple of years, and especially in the last three months, he said the volume of inquiries has dropped – by as much as 20 percent compared to the first three months of 2012 – but the quality of the questions has improved.
“The people that we are seeing in the first quarter of this year are further along in their thinking and are more committed,” he said. “They are beyond the idea stage. They are looking for help with organizing and starting a business.”
McKearney said in recent years more would-be entrepreneurs are building ideas around service-oriented ventures, such as Carter’s floral shop.
Carter said she has five wedding clients lined up for services and one group, the American Diabetes Association, interested in her work. She would like to open a storefront by next spring, though she’d maintain her niche in floral arrangements for weddings and special events, as well as silks for businesses. She also plans to teach floral design classes to supplement revenues for RosAmungThorns, a name that stems from her social media handles on Pinterest and Twitter.
The flip sideWhile startups are on the rise, the road to entrepreneurship is littered with business casualties.
According to Census Bureau data, about half of all new establishments survive five years or more and about one-third survives 10 years or more.
Notable area closures in the last year include downtown eateries Bocha Mocha, Gelato Mio and South & Walnut Bar & Grill, as well as The Pie Box on the far south side.
Pie Box owner Ryan Tiller said the four-year-old retail pie shop closed Feb. 15. Born out of his mainstay catering company, Dining By Design, Tiller said Pie Box was making a modest profit, and he shut it down, in part, due to looming health care regulations.
Tiller’s parent company, DBD Gourmet Inc., employed roughly 50 between the two businesses, and that critical employment marker under the Affordable Care Act made the small-business owner wary. By shedding the Pie Box and its three full-time employees, Tiller’s company would avoid the mandate on companies employing 50 or more to offer health insurance coverage or face fines of $2,000 per employee, excluding the first 30 workers.
“With the changes that are coming down the line with health insurance et cetera, I think every small business and business is looking at how many employees they have and how many can they afford to keep,” Tiller said.
When meeting with potential entrepreneurs, McKearney stresses the development of a viable business plan, including research to assess the competition.
“They need to test their idea and know if there is a market there. They also need to know that their business meets a need or solves a problem,” McKearney said, adding many don’t factor in businesses that offer similar services. “It sounds simple, but not everyone thinks in those terms.”[[In-content Ad]]
