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Small Business Month: The Impact of Small Business on Houston's Economy

Published May 04, 2021 by A.J. Mistretta

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Small business is big business in Houston. As the nation commemorates Small Business Month in May, the Partnership examined the latest figures on small business in Houston and the important role these organizations play in our region’s broader economy. 

Eighty-two percent of the firms operating in the Houston metro area have fewer than 20 employees. Together, these businesses employ just under 400,000 workers, or about 14% of the regional workforce, according to the U.S. Census Bureau’s Business Dynamics Statistics, 2018. Nearly 97% of businesses in the region have fewer than 500 employees—the standard to be considered a small business—and these collectively employ 44% of the region’s workforce, or 1.2 million employees. 

Census Bureau data shows that there are 663,800 “non-employee businesses” in the Houston region, which are generally sole proprietorships such as consultants, freelancers and the self-employed. What’s more, nearly 35% of Houston-area small businesses with 50 or fewer employees are minority-owned, and the diverse region ranks fifth in the nation for minority entrepreneurship, according to personal finance service Self Financial

So which Houston industries are most likely to see a high percentage of small businesses? Real estate is number one with roughly 88% of firms having fewer than 10 employees, followed by professional services at 84% and finance and insurance at 81%. Nationwide, construction, information and real estate have been the fastest growing small business sectors over the last decade. The same pattern generally holds true for Houston. 

The creation of new small businesses in this region is likely to keep growing. A new report released this spring ranked Houston among the nation’s top 10 metros for startup formation. The report from real estate investment group Roofstock was based on Census data that looked at startups as a percentage of overall businesses in the region. Houston logs more than 9,200 new startups annually, according to the report. Last year, the region's startups attracted a record $753 million in venture capital funding, up from $702 million in 2019. 

Today, there are more than 5 million U.S. businesses with fewer than 500 employees and 3.8 million with fewer than 10 employees, according to the Census Bureau. Companies with fewer than 500 employees account for about 59 million jobs, or nearly half of the national workforce (46%), and generate $13.7 trillion in combined annual revenue, about a third of all U.S. business revenue. 

Learn more about the Partnership’s Small Biz Matters business resource group and get information about how your organization can become a member today
 

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Since 1840, the Greater Houston Partnership has strived to make the Houston region the best place to live, work and build a business. Through the dedicated efforts of our 900 member companies in the 12-county Houston region, the Partnership supports the growth of industry and innovation by convening community-minded business leaders with one goal in mind - to make Houston greater.  While the world around us is rapidly changing, the Partnership remains committed to our mission-driven work that promotes Houston’s growth. As Houston’s largest regional chamber of commerce and principle business organization, the Partnership is recognizing this year’s Support Your Local Chamber of Commerce Day by looking back at some of the greatest impacts we’ve made in Houston in the last year.  Serving as a Robust COVID-19 Resource The virus’ arrival to Houston in the spring of 2020 drastically changed how the Partnership served our region. Halting in-person interactions to ensure the health and safety of our members, the Partnership quickly shifted major events, programs and meetings to an online environment. Through virtual forums with leading medical experts, as well as comprehensive communications through email, social media and the Partnership’s website, Houston.org, our organization worked closely with leadership at the Texas Medical Center to become a reliable source of COVID-19 data, best business practices, and health and safety information.  Tom DeBesse, Region Bank President of Houston North Region at Wells Fargo, said staying engaged with the Partnership during this critical time ensured his team remained well informed to make important decisions on employee and customer safety.  "I can’t tell you how important it has been to stay on top of information regarding COVID-19 as we’ve had to make changes to our daily operations during these difficult times,” DeBesse said. “The Greater Houston Partnership has served as a valuable resource for us—providing timely and useful updates that bring awareness and insight to news, health data, and best practices as it pertains to impacting our local business community." Convening the Greater Houston Business Community Serving 900 member companies, the Partnership plays a major role for facilitating local, national and international business connections. Providing an avenue for connections through events, membership networking and business-driven conversations, allows Houston – and businesses to benefit in ways that are most valuable to their company.  Tracy Weeden, President & CEO of Neuhaus Education Center, said the connections she’s formed through her membership with the Partnership have made a significant impact on her business.  “Becoming a member of the Partnership was one of the best professional decisions I’ve made as a CEO,” Weeden said. “Even though I’m leading a nonprofit, the ability to cross-pollinate with organizations in various industries is extremely helpful. Interacting and benefiting from the thought leadership in the business community has shown me that they are really tackling the same issues we are facing.” Impact-Driven The Partnership work to promote economic development and trade is reflected through our initiatives and economic development projects. Most recently, the Partnership launched the Houston Energy Transition Initiative, which will be guided by a strategic regional blueprint for leading the global energy transition to a low-carbon world. This initiative demonstrates the collective impact the Partnership makes when convening key stakeholders across industry, government and academia and highlights the organization's work to position Houston among the great global cities of the future. Steve Clarke, Division Vice President of Jacobs and Chair of the Partnership’s Infrastructure and Resiliency Advisory Committee, said he’s proud to play a role in the Partnership’s impact to infrastructure projects around the region.  “It is not often that you get to be part of a legacy project that will ultimately protect millions of our fellow Texans and change the way that we all look at Coastal Resilience,” Clarke said. “Thanks to the Greater Houston Partnership and the members of the Infrastructure Resiliency Advisory Committee, that I’ve had the honor of chairing the past 2 years, for your advocacy and lobbying that have made coastal infrastructure projects like this and many others possible.” Learn more about the Partnership’s impact. Have a testimonial you'd like to share with us? Share your story with our Member Engagement team. 
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