South Dakota small business has big impact

Tuesday, November 20, 2012

November 12, 2012 4:33 pm  • 

PIERRE | If believing there's a niche for a business that adds zing to something familiar makes you an entrepreneur, SonJa Boe is one. Just a few weeks ago, she opened the Spiceleaf, a bistro at 113 S. Pierre St.

The added zing comes from the freshness. She uses spices, meats and vegetables so fresh she doesn't even keep a freezer on hand.

Boe said finding a niche is part of the excitement of doing business.

"I guess I've always enjoyed being a business person," she said. "I like to create jobs for other people."

But Boe's passion for business isn't unique.

While the South Dakota Business Tax Division doesn't keep specific numbers on new businesses, its records suggest there is a steady increase in the number of people such as Boe willing to take the risk of launching a business. The records show the number of businesses at work in the state has increased by about 20,000 in the past decade.

The number of businesses that paid sales, use and contractors' excise tax on their products and services was listed as more than 59,000 back in 2000. By 2011, that number had jumped to more than 78,399.

Though most of those businesses are in-state, those figures also include companies doing business in South Dakota that are based in other states.

New business 7(a) loans from the Small Business Administration have also held consistent for a few years and last year actually exceeded the number of similar loans given to existing businesses, said John L. Brown II, the district director U.S. Small Business Administration.

"The rest of the country's startups are way down," Brown said. "So South Dakota is doing fairly well. We have stabilized, as manifested in the startup numbers."

The Small Business Administration also set a record last year in total loan amount, indicating some growth.

"We for the first time went over $90 million issued in the state," he said. "That is a record. It blew past the record we set two years ago that was $77 million. It just smashed it."

But the growth is not surprising, despite the nation's economic challenges, Brown said.

"During the recession that started in 2007 up to this point, our business drop-out rate, the number of business failures relative to the rest of the country, has been much lower because of the nature of our business-friendly environment here," he said.

He said the ease of starting a new business and maintaining an existing one is easier in South Dakota than many other states.

"We don't have a lot of additional, what I would call overhead," he said. "We don't have a lot of additional, ongoing taxes. You don't have a heavy burden of regulation."

Jeff Eckhoff, state director of the South Dakota Small Business Development Centers, said South Dakota has been ranked in business magazines as the best place to start a small business.

Two Pierre business owners agreed the business climate was good.

Peggy Kelly, who owns the Mostly Chocolates store, which opened in July, said the state's laws were not difficult to deal with.

"I had to have a sales tax license first," she said. "Then because we make the chocolates in the store and have a full espresso bar we had to have a license from the Department of Health. We started with almost all new construction so meeting the health department requirements was not difficult."

Kelly said Christmas is the biggest holiday for her business and she is looking forward to Mostly Chocolates being one of the Pierre Christmas shopping opportunities.

Justin Crosby, who owns The Garage Door Guy, spends his days fixing an invention that has become a necessity for many people. Created in 1926, the electric overhead garage door opener is now an ordinary fixture of life for a great many Americans - but a hassle to fix or install. Crosby said he got into the business because he saw the demand for a service he knew he could provide and he knew he had the skills to do it well. South Dakota's minimal paperwork made it easy to launch his idea for a small business.

When Crosby opened his company more than a year ago, all he had to do was apply for a sale tax license. That left him time to worry about other business matters, such as advertising and managing inventory.

Now Crosby keeps busy with plenty of replacements and repairs of both residential and commercial garages.

Also beneficial for current and future entrepreneurs, Brown said, is a close-knit network of support for potential and current entrepreneurs.

South Dakota's small population is an advantage in this area as it allows the various resource organizations to work together, rather than against each other.

"Maybe we are small enough that we realize we need to work together to move the ball forward," he said.

He said in some larger state's organizations are less willing to refer people to others for more help.

Eckhoff said he has seen that as well.

"One of the things I am constantly amazed at when I go out of state are the things that we take for granted in how easy we work with our partners and how agencies work together and how efficient we are with services," he said. "That doesn't happen in other states."

Boe said business is going well and she is happy to focus on making her bistro unique rather than worrying about state paperwork.

"I think communities like variety and I've given them that with this," she said.



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