Small Business Ideas In Texas – Restricted labor market with access to capital No corporate or personal income tax Simplified state regulation Growing cities Diversity and supportive business environment Frequently asked questions about doing business in Texas Resources for small businesses in Texas Texas
If you are considering starting a business in Texas, you should be aware of these opportunities and challenges.
Small Business Ideas In Texas
They say everything is bigger in Texas, and that includes the state’s economy. The Lone Star State boasts a gross domestic product of $1.77 trillion, the second largest in the nation. According to the US Small Business Administration, there are 3 million small businesses in the state, employing 4.9 million people. That’s over 45.1% of the private sector workforce in Texas. According to the US Bureau of Economic Analysis, the country’s economy grew 10.1% in the fourth quarter of 2021, outpacing national growth of 6.9%.
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The unemployment rate in Texas has fallen sharply since 2010, to 8.2%; Today it is 4.4%, slightly above the national unemployment rate (3.6%), according to the US Bureau of Labor Statistics. Low unemployment is a good indicator of Texas’ economic health, but it’s a double-edged sword: the labor market means smaller businesses have to pay more for top talent and face stiffer competition for workers in larger companies with deeper pockets. Business owners remain optimistic about the strong economic recovery from the 2008 financial crisis.
“Texas is a dynamic state,” said Trey Bowles, founder and CEO of the Dallas Entrepreneur Center. “You could argue it’s the No. 1 state to do business in, and we’d say it’s the No. 1 state in which to do business right now.”
What do business owners have to say about the current state of small business in Texas? Are small businesses enjoying a healthy economy and are you optimistic about what tomorrow holds for Texas entrepreneurs? We reached out to some business owners in the state to find out.
One of the challenges that small businesses, especially startups, face is access to capital. Starting or expanding a business requires significant capital, but Texans say it can be difficult for entrepreneurs to find the money they need.
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“It’s all because banks are no longer lending money like they did 10 years ago,” said David Frankel, chief marketing officer at Touchplan. “It’s more conservative, and it’s a global trend.”
Frankel said many small businesses struggle to get loans from regional banks and people living in rural areas have limited options unless they go to town. Venture capitalists (VCs) and angel investors are hard to find, and if they are willing to invest, they attach undesirable conditions to the capital they offer.
For example, Frankel said, VCs often want to uproot companies and move them to places where the investor is headquartered. Although there are a handful of wealthy potential investors based in Texas, state money generally does not go to local businesses.
“Startup companies don’t have enough capital,” Bowles said. “There’s a lot of money in this industry…but how do you convince a billionaire or a big corporation to invest in start-up entrepreneurs?”
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One of the most common issues faced by small business owners we spoke to was difficulty finding the workforce they needed to grow at the rate they wanted. Texas’ massive economic growth and a continuing labor shortage through 2022 appear to have contributed to the problem. However, most of the entrepreneurs we spoke to struggle to find additional help, which means they are constantly expanding.
Travis Crabtree, Founder of Swyft Filings, said, “Whether you’re looking for help in areas of the Permian Basin, it’s becoming increasingly difficult to find skilled workers with the experience of tech workers in Austin or petrochemical engineers in Houston. “There are concerns that the state’s education sector is not giving the attention it needs to continue providing a talented workforce. Additionally, we are trying to address some quality of life issues to make cities more walkable and more attractive to young creative workers.”
Kelly Sirna and Stacey Elliston, founders of Studio 11 Design, said while business has been great, positions have become harder and more expensive to fill.
“We have to pay designers 20% more as soon as they finish their studies, whereas before no one had moved and things hadn’t grown yet, so we could get less out of it,” says Sirna.
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Texas has no corporate or personal income tax or state property tax, so businesses get a bigger slice of the pie on tax day. No income tax means Texas’ “Tax Freedom Day,” April 5, is the fifth day in the country that Texans earn enough to pay all of their taxes.
“The tax burden is low here; That’s the most obvious benefit of being in Texas,” Sirna said.
Of course, Texas still has a budget to spare. According to data released by the Texas Comptroller’s Office, the state derives most of its tax revenue from sales and franchise taxes. Texas has a 6.25% state sales tax, which may be subject to an additional 2% local sales and use tax. According to the Tax Foundation, Texas has an average state and local tax burden of 8.6%, making it the sixth highest rate for these taxes.
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Many business owners have told us that the regulatory environment in Texas is conducive to successful business operations. Even entrepreneurs in the most regulated industries, like Cody Yarborough, CEO of Lifecycle Biotechnologies, have said they’re happy with the state’s approach.
“We’re in a highly regulated industry, but at the state level, Texas is business-friendly,” Yarborough said. “The state government tries not to get in the way of us, and it’s always popular in the state assembly.”
Christopher Corso, who has expanded his law practice to Texas, said the state’s easy-to-navigate laws made the transition easier.
“You always anticipate obstacles and challenges, but it was very fluid,” he said. “Complying with state law is very easy. I find it much easier here than on the East Coast [where I worked].”
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Fuel scarcity allows businesses to strategize and scale faster, says Andy Albertini, owner of A2 Consulting Group.
“State laws are clear and easy to follow, which saves me having to hire outside experts to help me stay compliant,” he said. “These cost savings can continue to drive immediate growth.”
Major cities in Texas such as Dallas-Fort Worth, Austin, Houston and San Antonio are experiencing strong growth with increased economic activity. Entrepreneurs have seen more startups and small businesses, as well as new residents increasing demand for their goods and services.
“Small businesses are booming in Texas,” said Bernard Ortiz de Montellano, former owner of Anago Cleaning Services in Austin. “I’m in Austin, and the growth rate here is crazy. A lot of our clients are growing.”
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Corso said the same growth was happening in Houston, where his defense firm has been doing business for a year. This growth has created more startups and entrepreneurial opportunities, Corso said.
“You talk about small business, you can go anywhere, and that’s what you see,” Corso said. “There is no empty space. The growth is huge. It’s just a flood here.”
Another advantage of doing business in Texas is the supportive and diverse community for entrepreneurs throughout the state. Many entrepreneurs said they belonged to an entrepreneurial organization or sought help from a development center. Others said their region is experiencing a boom in startups and small businesses fueled by population growth.
“Texas, as far as I can tell…hasn’t been hit as hard by many economic challenges,” said Rusty Cram, executive vice president and CEO of C.G. Laboratories.
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“When you’re driving down the road, you can’t believe how many businesses there are left and right,” Corso said. “I am in a wonderful city; It’s pro-growth and pro-diversity.”
Mark del Bosque, head of paid advertising at The Digital Ring, said amid rapid growth and a healthy business environment, he has received support from community members and other owners. small enterprises.
“There’s a really tight network of people here, and I’ve found the support to be a good thing,” she said. “It looks like a great start for a revolution in initiatives where people work with and grow small businesses.”
For example, Sirna and Elliston took advantage of the favorable trading environment in Dallas.