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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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Partnership Members Making News - May 2022

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The Greater Houston Partnership celebrates our members making important announcements and sharing news about their operations and impact in our community. Learn more about some of those announcements over the last month below.  Accenture ranks No. 1 on DiversityInc’s 2022 Top 50 Companies for Diversity. This is the 16th consecutive year that the consulting company has ranked on the respected list for the company’s work to create an inclusive and equitable culture. DiversityInc evaluates companies in six areas: human capital diversity metrics, leadership accountability, talent programs, workplace practices, supplier diversity and philanthropy.  Axiom Space broke ground on May 11 on a new 400,000-square-foot headquarters facility at the Houston Spaceport. The aerospace company will build the world’s first commercial space station at the 22-acre facility on Space Center Boulevard. The new headquarters will also house a training facility for astronauts, manufacturing and testing operations and office space. Axiom Space made history in April with the first all-private astronaut mission to the International Space Station.  BakerRipley President and CEO Claudia Aguirre talked about the effect the pandemic has had on the region’s largest nonprofit organization and much more in a wide-ranging interview with the Houston Chronicle. Aguirre, who has been with BakerRipley since 2010, took the reins of the 1,600-employee organization in 2017. BakerRipley provides services ranging from child education to workforce development. Aguirre currently serves on the boards of several organizations including the Partnership and the Federal Reserve Bank of Dallas.  Leading energy companies BP and Linde announced plans in mid-May to move forward with a large-scale carbon capture and storage project in the Houston region. The project would enable low-carbon hydrogen production at Linde’s existing facilities and establish a framework for broader decarbonization efforts on the Texas Gulf Coast industrial corridor. The sequestered hydrogen would be sold customers along Linde’s pipeline network under long-term contracts, enabling production of low carbon chemicals and fuels.  Houston Methodist is beginning work on a new $1.4 billion tower in the Texas Medical Center. The 26-story Centennial Tower will include a new emergency department and updated imaging services. When it opens in 2027, Centennial Tower will replace Methodist’s main building on Fannin St. The new tower will be approximately double the size of the hospital’s current facility.  The emerging Ion District in Midtown is now part of a prestigious network of innovation hubs around the world. An affiliate of the Brookings Institute, the Global Network of Innovation Districts is comprised of innovation leaders and commercial developers. The Ion District is the first such project to join the network in Texas, joining 21 other districts from Pittsburgh to Amsterdam. The Ion itself anchors the 16-acre district that also currently includes Greentown Labs. Kroger Houston Division President Laura Gump was the subject of a recent Houston Chronicle business profile. Gump joined Kroger in 2020 and is the company’s first Hispanic female president of the nation’s largest supermarket chain. In the Q&A-style piece, Gump shared her thoughts on the evolution of the grocery business, the effect of inflation on consumer buying, the supply-chain crisis and much more.  The Lone Star College System (LSCS) will launch a new virtual campus in August as it works to satisfy increasing demand for online degree programs. The virtual campus will add $2 million to LSCS’s existing budget and significantly expand its catalogue of e-learning options. Officials say that while the pandemic has amplified demand for e-learning, the virtual campus has actually been in the works for nearly a decade. The campus will launch with approximately 40 full-time staff members.  Nine energy startups from across the country were recognized as the most promising in a pitch competition during the Offshore Technology Conference earlier this month. The Rice Alliance for Technology and Entrepreneurship staged its annual pitch competition at the Ion in Midtown. Investors heard three-minute pitches from nearly 40 energy tech companies and cited nine startups as having the most potential.  Southwest Airlines will invest $42 million to expand its fuel storage facility at Hobby Airport. Houston City Council approved the plan on May 11, paving the way for increased fuel capacity at Southwest’s primary airport in Houston. The airline says the measure is needed to mitigate the effects of potential supply disruptions, increasing the airport’s capacity from two or three days of fuel inventory to five or six.  If you are a member and want us to help communicate news about your organization, please send a press release or information about the announcement to member.engagement@houston.org and we will share it with our content team for possible inclusion in an upcoming roundup. Learn more about Partnership membership.   
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The Greater Houston Partnership welcomed 11 new member companies in the month of April. The Partnership works to connect companies with resources, information and networking opportunities to help increase business while also providing a platform to influence the direction of the region.  New members who joined in April include: ALLY Energy: ALLY Energy is a community and online platform designed to attract, retain and develop the next generation of energy talent. Website Cushman & Wakefield U.S., Inc.: Commercial real estate services firm, including brokerage, advisory services, asset management and corporate services. Website Drax Group PLC: Drax Group is a renewable energy company engaged in renewable power generation, the production of sustainable biomass and the sale of renewable electricity to businesses. Website Harris Health System: Healthcare. Website HNB Realty: HNB Realty is an asset management and investment consultancy designed for private investors by private investors. Website Impact Networking, LLC: Impact Networking works primarily with businesses of all sizes to alleviate the challenges of adopting and implementing new technology and processes. Website NFI Industries: NFI is a fully-integrated third party logistics provider including distribution and warehousing, dedicated transportation, non-asset logistics, port services, and industrial real estate. Website She's Happy Hair: She’s Happy Hair is a veteran operated, black-owned business that recognized a void in the hair industry. Website Solidatus: Solidatus is transforming data management with dynamic, visual maps of data relationships and flows. Website The Taligens Group LLC: Taligens Group is a learning organization committed to helping achieve your definition of success in the areas of ERP training, change management initiatives and talent management needs. Website View: View is the global leader in Dynamic (electrochromic) Smart Glass. Website Click here to see the Partnership's Membership Directory. To learn more about membership with the Greater Houston Partnership click here, or contact membership@houston.org.
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