The Tennessee state motto is “America at its best,” and among America’s best qualities are the innovation and entrepreneurism that fuel our economy.
The Beacon Center of Tennessee, a grantee of Stand Together Trust, wants to make good on its state motto by increasing the ability of innovators and entrepreneurs to thrive in their state. The Beacon Center convened an Entrepreneurship and Innovation Council to help facilitate this goal of boosting innovation in Tennessee. Council members included CEOs, investors, Tennessee elected officials, and entrepreneurs.
To assemble their report and recommendations for the state, the Entrepreneurship, and Innovation Council sought to identify the biggest barriers to Tennessee becoming the most business-friendly state in the nation. Reforming the tax code, streamlining the process for business registration, and increasing entrepreneurship classes in local schools are just a few of the suggestions Beacon has for the state — and some of these changes are already being proposed in the legislature.
“Tennessee has become the envy of many states with the nation’s lowest per capita debt and second lowest tax burden after Alaska, explains their report, “Making Tennessee the Innovation Capital of America.” The report concludes:
However, if Tennessee wishes to have a thriving economy in the future, it must become an entrepreneurial and innovation leader today with a more dynamic economy in which new startups are created, thrive, sometimes fail, and realign. To accomplish this, we must identify and pursue reforms that nationally recognizes Tennessee as the easiest place to start a business and creates an economic system that allows all entrepreneurs to flourish without onerous government interference.
A think tank that inspires action
“Beacon prides itself on being more than just a think tank,” says Justin Owen, president and CEO of the Beacon Center. “We climb down from our ivory tower and meet people where they are, learning about the challenges they face, and partnering with them to offer solutions that will solve their real-world problems.”
Beacon is well-respected for this approach.
“The reason I’m a part of this council is because I see Beacon as the best positioned leader in the state promoting entrepreneurship from a policy standpoint,” said Jared Meggs, Founder and CEO of ProsodyHealth and Beacon Entrepreneurship and Innovation Council member.
Already, six of the council’s 14 reforms have been proposed by Governor Bill Lee or legislators during the 2023 legislative session.
Particularly, Governor Lee has proposed a piece of legislation that would reform the tax code to make Tennessee more economically competitive and reflects some of the recommendations from the Council’s report. Additionally, while the governor’s proposal does not fully repeal the business gross receipts tax like the Beacon report recommends, it eliminates the tax for 140,000 Tennessee businesses. It cuts it by 37% for all other businesses. He also proposed the most sweeping corporate franchise and excise tax reform in state history. And legislators are debating fixing the problems Beacon identified with the tangible personal property taxes businesses must pay.
It’s not just tax reforms the Council proposes, either. The Council proposed a “Free to Be in Tennessee” campaign. If implemented, the suggestions of this campaign would exempt first-time businesses from the state filing fee to start a new business and create a one-stop shop to streamline business filings to replace the maze of agencies and documents businesses must currently navigate.
Other recommendations in the report include suggestions such as:
- Local colleges are offering more entrepreneurial programs for individuals looking to start a business.
- Eliminating the requirement for providers to meet a patient in-person before using telehealth.
- Creating a regulatory sandbox would allow innovative companies to develop, test, and grow their businesses by “temporarily removing archaic regulations that have nothing to do with health and safety” and providing clarity up front on what they are and are not allowed to build.
New employment, economic growth
Ultimately, these reforms aren’t just suggested for the benefit of business owners — they’re for the benefit of all Tennesseans.
Cumbersome rules and regulations can be difficult for big companies to manage. For small businesses, many of which may only begin with one or two founders, understanding and following state regulations for new businesses and innovations seriously limits the ability to focus on the product or service they’re seeking to offer.
“My interest and experience is in healthcare,” said Meggs, “I believe there is an ability through this council to make an improvement for Tennesseans in how they access and experience health care, and perhaps improve the process for the business owner.”
Of course, another benefit of increased entrepreneurship for Tennesseans is the possibility of more jobs.
“If there is one word that best describes the American economy of the past few decades it is change,” Beacon’s report reads. This change has led to new types of employment, higher productivity among American workers, and higher employment rates. Yet “[f]rom 2005 to 2017, more than 90 percent of America’s innovation-sector growth was in five metro areas: San Jose, San Francisco, San Diego, Boston, and Seattle.”
If cities in Tennessee want to be added to that list, policymakers, business leaders, postsecondary educators and other community stakeholders need to understand what barriers prevent the creation of new businesses and how to foster a more entrepreneurial environment.
The Beacon Center and the Entrepreneurship and Innovation Council are ready to share their stories and work with Tennessee lawmakers and business leaders to make that happen.
To learn more about the Beacon Center of Tennessee visit https://www.beacontn.org/
Click the link to read Making Tennessee the Innovation Capital of America.