September 25, 2014 Brian Kelsey

State of Small Business in Austin

This article was written by Dan Zehr and appeared in the Austin American-Statesman on September 25, 2014.

Austin officials: Small businesses provide base for growth

Austin’s small businesses drove the metro area’s post-recession recovery, but local officials said Thursday that a sustained effort to help those firms thrive will be required if Central Texas is to spread the benefits of that economic growth to more local residents.

While local businesses with fewer than 100 employees collectively employ about 35 percent of the Austin workforce, said Brian Kelsey, principal at Civic Analytics, the same set of companies added more than 8,400 jobs from 2009 to 2011. Those gains offset the sharp job losses at the area’s largest employers in the years following the recession, Kelsey said.

All told, the more than 31,000 small businesses in the region provided about 228,000 jobs as of 2011—giving Austin’s small business community a greater share of local employment than their counterparts in Houston, Dallas, San Antonio and the country as a whole.

Kelsey presented the data Thursday at the city’s “State of Small Business in Austin” luncheon, part of a daylong event designed to bring together and local officials and service providers together with area entrepreneurs and small business owners.

“As small businesses go, Austin goes,” he said.

Each year from 2001 to 2011, the metro area gained an average of 650 small businesses that collectively added about 4,000 jobs, Kelsey said. Many of those companies were concentrated in industries such as construction and real estate, the data show, but the area small businesses also accounted for many jobs in manufacturing and other key middle-wage occupations.

Yet a closer look at the area’s small firms also reveals a sharp disparity in the revenues and productivity levels by ownership category.

While sales at most of the region’s small businesses ranked higher than average levels nationwide — local Asian-owned firms actually doubled the U.S. average — Hispanic- and women-owned firms generated lower sales, according to 2007 Census data.

Those levels might have changed in the intermediate years. The Census Bureau conducted its 2012 business survey but has not yet released that data for metro areas.

Regardless, as a source of jobs and incomes for so many Austin workers, finding ways to promote small business growth overall, but especially in struggling categories, has become a primary focus for city development officials, said Kevin Johns, the city’s economic development director.

“We have the top economy in America,” Johns said. “If we can’t correct this, no one can.”

The daylong “Getting Connected” event was created in part to help address some of those issues. Held at the Palmer Events Center, the program included a range of classes, exhibits and resources to help small businesses connect to anything from financing to potential business partnerships.

Jonathan Taylor, executive director of the Economic Development and Tourism Division at the governor’s office, said those sorts of resources remain critical for small business development and growth.

Some 15 years ago, Taylor said, the division held its first forum, which it focused on concerns expressed by the state’s small business owners. The topics that year included access to capital, access to government contracts and how to promote and conduct business on the Web.

“The topics we had 15 years ago are still the topics we have today,” he said. “Those challenges remain the same.”

A 2013 needs assessment conducted by the city’s Small Business Program found that most local businesses want similar information. In panels and surveys, local small firms said they would like more online resources, information tailored for specific industries, and increased networking opportunities.

Classes at the Getting Connected program included tutorials on writing government proposals, owning your web presence and tips for exporting. Almost all of them were booked to capacity, city organizers said.

“We used to host an event that was just for business owners to meet lenders,” said Joy Miller, business information coordinator for the city’s Small Business Development Program. “This year, we’re combining it with an event that brings any kind of business resource you need.”

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