Small Business Matters
In my last blog, An Unmet Demand for Small Industrial Buildings. How is the Spartanburg Industrial Market Impacted? ,I discussed how the unmet demand for small industrial buildings was particularly important because many of the small industrial users are local, small to mid sized businesses.
I touched on the importance of small businesses and how they play a vital role in the fabric of our local economy.
In this blog, I’ll take a deeper dive into the impact small businesses have on the economy and the role they have played in the local real estate market.
Economic Impact of Small Business
According to the SBA Association, small businesses make up 99.95% of all businesses in the United States.
Small businesses comprise 44% of all economic activity and provide 2/3rd of all jobs in the United States.
From these statistics alone, it’s apparent that small businesses truly matter.
Small businesses may matter, but small business is hard.
Historically, small businesses don’t make it during their start up years, and they don’t survive in the long run.
- 18% of small businesses fail within the first year.
- 50% of small businesses fail within the first five years.
- 5% of small businesses are 20 years old or older.
Although small businesses are responsible for a significant percentage of economic activity and jobs, small business survival and longevity is relatively low.
With this in mind, what role do small businesses play in Spartanburg’s real estate market?
Small Business’s Role in Real Estate in Spartanburg, South Carolina
Two of the most basic questions someone can ask when studying a real estate market are: Who are the buyers? Who are the sellers?
More specially for our purposes, what percentage of real estate sellers and buyers have been owner users recently in Spartanburg?
Retail Buildings In Spartanburg in the Last Five Years
In the past five years, 10% of the sellers of retail buildings fall into the user category and 12% of all retail buyers fall into the user category according to Costar.
Although “users” may include a company larger than a small business, most large companies would not fall into the “user” category.
The largest percentage of retail buyers and sellers in the past five years have been the private owners (making up 76% of buyers and 83% of sellers).
Owners who fall into the private category may also be small business owners. For example, the owner may purchaser a three unit retail center where a business operates in one unit and the other two units are rented for income.
Users account for around 11% of the buyers and sellers in the retail asset class in Spartanburg.
Industrial Buildings In Spartanburg in the Last Five Years
Users account for 6% of buyers in the past five years for industrial real estate in Spartanburg and comprise 13% of the sellers in this category. Private entities accounts for 28% of buyers and 55% of sellers.
Perhaps the reason that such a small percentage of users have purchased industrial real estate in Spartanburg in the past five years is because of the shortage of small industrial buildings in the area.
It seems plausible that users have accounted for 13% of industrial sellers because small business owners were seizing the opportunity to sell while there is a strong demand for industrial buildings.
While the “user” category of small businesses makes up a small percentage of the total buyers and sellers in the retail and industrial categories, 13% of industrial real estate sellers in the past five years in Spartanburg were users, and 55% of industrial sales were from privately owned sources.
When there is a strong demand for a particular real estate category, smaller businesses and entities may be able to respond to opportunities in the market much easier than larger companies.
Small businesses matter, but small business is hard.
What I’ve learned as the second generation to work in a long operating small business
In 2023, McDaniel and Company will turn 41 years old. Given that only 5% of small businesses are 20+ years old, we celebrate that our company has been able to serve the Upstate for over four decades.
Key Principals to Follow
- Adapt. The economy, trends, technology, and everything else is always changing. Be eager to learn and stay current. Be open minded to change.
- Creativity. No matter what industry, a creative perspective can bring so much value.
- Ethics, Integrity, and Client Focused. Our clients and their best interest are our priority.
- Talent. Attract and retain talented individuals.
- Be Prepared for Hard Times. The best time to prepare for hard times is when times are good.
Small businesses have several advantages over larger businesses. In a company with a few decision makers, it is much easier to quickly adapt to circumstances and to have the flexibility to creatively solve problems.
Conclusion
Small business matters, but small business is hard. Although the majority of businesses in the United States are small businesses, most small businesses fail within their first few years and do not survive in the long run.
Owner user business owners in Spartanburg account for around 11% of the buyers and sellers of retail buildings.
For industrial real estate transactions in the past five years in Spartanburg, 6% of buyers have been owner users while 12% have been sellers.
Although statistically, many small businesses do not survive in the long run, there are some key principles that help a small business thrive, even during the hard times.
If you’d like to discuss this blog, small business or anything related to commercial real estate, let’s connect!
Emma McDaniel
864-576-4660
Sources:
Costar
How Small Businesses Drive The American Economy (forbes.com)
How Small Businesses Benefit Local Economies (businessnewsdaily.com)
