Revenue growth and economic confidence fuels small business expansion in Houston

Local entrepreneurs are finishing 2018 on a high note, with most Houston-area small business owners reporting anticipated year-over-year revenue growth and indicating plans to expand in the year ahead, according to the fall 2018 Bank of America Business Advantage Small Business Owner Report. The majority of business owners are pleased with the direction of the local economy and—bucking a national trend—Houston entrepreneurs are finding ways to land qualified employees in a historically tight job market.

The report, based on a semiannual survey of 1,000 small business owners across the country and the greater Houston area, revealed that 86 percent of Houston entrepreneurs are confident their year-end revenue will exceed that of 2017 revenue. In addition, over the next 12 months:

  • Eighty-one percent of Houston business owners believe their revenue will increase (vs. 71 percent in fall 2017, and 24 percentage points above the national average)
  • Eighty-six percent plan to expand (vs. 82 percent in fall 2017)
  • Thirty-eight percent plan to hire (vs. 41 percent in fall 2017, and 11 percentage points above the national average)
  • Seventy-five percent are confident the Houston economy will improve (vs. 61 percent in fall 2017, and the highest among business owners surveyed in 10 major cities)
  • Fifty-six percent express similar confidence in the national economy (vs. 50 percent in fall 2017)

“Since last year, a significantly higher number of Houston business owners are confident in their local economy, translating into strong optimism toward year-end revenue and future expansion,” said Elizabeth Romero, Southwest small business division executive at Bank of America. “While small business owners in most other major cities are facing the challenges of a highly competitive labor market, Houston entrepreneurs are finding ways to secure the talent they need to drive continued growth.”

Houston entrepreneurs finding ways to land talent in competitive job market

Houston business owners are making plans to hire in the year ahead, but at the same time, retaining employees has become a significant challenge. In the last year, turnover affected 30 percent of Houston entrepreneurs. This said, Houston entrepreneurs are subverting a nationwide challenge when it comes to talent acquisition. Among business owners who sought to hire new employees, 59 percent say it was easy finding qualified candidates.

However, when Houston business owners looking to hire were unable to find the right employees, repercussions were severe—74 percent of that group say their inability to find qualified candidates limited business growth, tied for the highest percentage nationwide.

When it comes to the top characteristics Houston business owners are looking for in their potential job candidates, entrepreneurs primarily value integrity (55 percent), previous work experience (51 percent), passion for the work and mission of the business (44 percent) and the ability to learn new skills (44 percent).

Concern for most economic issues declines; worry rises over commodities prices

In correlation with positive business forecasts in Houston, the survey found a general trend of declining concern over most economic factors that are tracked. Health care costs remain at the top of the list (60 percent), although concern has dropped from 67 percent last fall. Concern over corporate taxes dropped three percentage points since last year, with 44 percent still identifying this as a burdensome issue nearly a year after the enactment of U.S. tax reform.

Perhaps a result of recent changes to and uncertainty about trade policies, 40 percent of Houston business owners identify U.S. trade policy as an economic concern. Forty-nine percent say the latest tariffs/U.S. trade policies have impacted their businesses, with 22 percent reporting both positive and negative effects, 14 percent reporting a negative impact and 14 percent reporting a positive impact.

Houston small business owners feel the holiday spirit; recommend entrepreneurship as a career path

Houston business owners are feeling the holiday spirit as 89 percent plan to offer at least one holiday perk to their employees. The top holiday perks being offered are office closures (59 percent), salary bonuses (40 percent) and flexible hours or vacation time (40 percent). Finally, despite unique challenges in managing a small business, Houston entrepreneurs love what they do. Eighty-nine percent say the added stress of entrepreneurship has been worth it, and 90 percent would recommend that others follow in their footsteps.

For a complete, in-depth look at the insights of the nation’s small business owners, read the fall 2018 Bank of America Business Advantage Small Business Owner Report and for additional insights, download the Small Business Owner Report infographic.


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