Austin leads nation in small business climate, creation

By Yvonne Lim Wilson Friday, 26 March 2010

SOUTHWEST AUSTIN — City programs and ‘buy local’ attitude help entrepreneurs succeed in Austin

Back in 2001, Lisa Gaynor found herself laid off from her marketing job at a major company. She poured her energy into her home, wanting to fill it with nice furniture and home accessories. But she was not satisfied with the consignment furniture options in Austin and, after talking it over with her husband, thought she could fill a need.

Gaynor took a trip to the city’s Small Business Development Program and received help every step of the way. Gaynor used SBDP databases to research demographic information, received free counseling advice and signed up for classes.

“They helped guide me through writing a business plan. It was a wonderful opportunity to bounce the idea off people who were completely neutral on it and saw it the way a bank would look at it,” Gaynor said.

Within days of submitting it to the bank, Gaynor was approved for her small business loan. In 2005, Design It With Consignment—located at 4211 S. Lamar Blvd., Ste. A-23—was born. The business employs five people and Gaynor has plans to expand this summer.

Gaynor’s story is not unusual in Austin. The city is filled with entrepreneurs offering everything from gourmet food trailers and independent bookstores, to professional services and wine bars.

“There’s an old saying in Austin: If you come here and can’t find a job, start a new business,” said Rebecca Melancon, executive director of the Austin Independent Business Alliance.

Small business is big business

City involvement plays a large role in supporting local businesses and representing the community’s values of independent entrepreneurship.

Margaret Shaw, director of Neighborhood Housing and Community Development, described the city’s programs as a “three-legged stool” with one leg providing technical assistance, another working through nonprofits to provide loans to small businesses and a third that “sets the table,” attracting larger businesses to locate to Austin thereby providing spinoff benefits to local businesses.

The city’s Small Business Development Program, created in 2000, is a unique resource that provides free resources and low-cost classes to citizens.

It is a little known fact that Austin’s SBDP is the only 100 percent locally funded small business program in the country. Other small business programs are tied to the national Small Business Administration and usually are affiliated with local universities.

Not having to rely on federal funding has several advantages, said Rosalinda Jalifi, assistant director of the city’s Economic Growth and Redevelopment Services office, which oversees the SBDP.

“We have more flexibility. We are very agile to change programs. There are no requirements on the types of businesses we serve; there are no geographic restrictions. Performance targets are determined locally,” Jalifi said.

Keeping Austin local

While the city and other groups have a lot of programs to help small businesses, Austin’s “Keep Austin Weird” support for unique culture translates directly into support for local businesses, Melancon said.

“The biggest thing our city does to promote local business is not something that city hall does. It’s our culture,” Melancon said. “We don’t want to be Anywhere, U.S.A., and we work hard not to be.”

Cities that have a strong small business economy are expected to recover from economic downturns more rapidly, according to the Small Business Administration.

During the two past recessions, firms with fewer than 20 employees were the only ones with positive net job growth, the SBA reported.

“When you have a lot of small businesses, you have a lot of inherent diversity, and that inherent diversity helps insulate you from the economic downturn,” Mayor Lee Leffingwell said.

Support of local business is something deeply ingrained in Austin’s culture and is something that will carry Austin toward a more sustainable future, Leffingwell said.

“I hear it every day: ‘Let’s go to Jo’s Coffee Shop instead of National Chain Coffee Shop.’ So many of these local companies are people’s friends and neighbors and people are aware of that,” he said. “It’s a revivalist movement of doing things locally—with food grown locally for example—and it contributes to our sustainability as a city and as a society.”

Small business vitality rankings for 100 largest metros				Southwest Austin stats
2010 rank	2009 rank	Metropolitan area		The southwest Austin area, as defined by the seven zip codes 78735, 78736, 78737, 78739, 78745, 78748 and 78749, is home to 3,212 businesses, according to 2007 U.S. Census data. Small businesses with fewer than 100 employees account for 98 percent of all businesses in the region. 57 percent of the businesses in these zip codes have only one to four employees. The largest industry in the region is professional, scientific and technical services, which accounts for 15 percent of all businesses. The second largest industry in the region is construction at 11 percent.
1	4	Austin
2	45	Baton Rouge, LA
3	1	Raleigh, NC
4	18	Charleston, SC
5	10	Portland, ME
Source: Portfolio.com
Austin was ranked:
#1 city in America for small business creation, Portfolio.com #1 large city in America for jobs, Forbes.com #1 (tie with Washington, D.C.) city best surviving the recession, Forbes.com #8 best place to launch a business, CNNMoney.com The number of small businesses in Austin increased by about 6 percent between 2006 and 2007 compared to the national average of about 1.4 percent. 90 percent of companies in Austin have fewer than 10 employees. 75 percent of all Austin jobs are with companies that employ fewer than 100 people. In 2009, 14,590 Doing Business As, or DBAs, were filed in Travis County, compared to 12,919 in 2000.				78735 — #1 Professional, scientific and technical services 78736 — #1 Construction 78737 — #1 Professional, scientific and technical services 78739 — #1 Professional, scientific and technical services 78745 — #1 Healthcare and social assistance 78748 — #1 Retail trade 78749 — #1 Professional, scientific and technical services
Source: City of Austin Small Business Development Program, Travis County Clerk’s office				Source: U.S. Census

Local resources for small business owners and startups

A sample of a few of Austin’s myriad entrepreneurial support organizations

City of Austin’s Small Business Development Program

• 505 Barton Springs Road, 13th Floor
• 974-7800
• www.austinsmallbiz.org
• As host to the “Meet the Lender” event, Business Solutions Center offers free and low-cost resources, computers, directories, demographic research information, BizAid counseling services and classes.

PeopleFund

• 207 Chalmers Avenue
• 472-8087
• www.peoplefund.org
• PeopleFund is a nonprofit that provides free financial counseling, small business loans, in-house accounting, budgeting, marketing and legal referral services. This group also focuses on job creation in Austin.

BiGAustin

• Capital Plaza Office Building, 5407 N. IH 35, Ste. 200
• 928-8010
• www.bigaustin.org
• BiGAustin is a nonprofit group that offers flexible micro-loans, as well as educational services and business counseling.

RISE

• 485-2574
• www.riseaustin.org
• Free conferences for entrepreneurs featuring top Austin entrepreneurs; past speakers include Roy Spence of GSD&M, John Mackey of Whole Foods and Patsy Woods Martin of I Live Here, I Give Here

SCORE Austin

• 5524 Bee Caves Road, Bldg. M
• 928-2425
• www.scoreaustin.org
• Experienced business professionals provide free, confidential counseling on a volunteer basis

Bidmodo.com

• www.bidmodo.com
• A new business-to-business site connecting small business owners with each other to receive competitive bids from local sources

Austin Independent Business Alliance

• 441-2123
• www.ibuyaustin.com
• Promotes and advocates on behalf of local member businesses, arranges joint media buys, holds networking events and founded “Austin Unchained” shop local day