State of Small Business in AustinEconomic Development

Brian Kelsey, PrincipalCivic Analytics LLCcivicanalytics.com@civicanalytics

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Presentation Overview

• Review state of Austin economy

• Review latest statistics on Austin small businesses released by the U.S. Census Bureau (Aug ’15)

• Big splash from Kauffman

• Growth challenges

• Big ideas

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Austin economy has grown nearly 3x faster than US metro economy since recession ended 2009

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%Real GDP Growth (2013 Dollars)

Austin MSA

USA (Metro Portion)

Source: Bureau of Economic Analysis

Austin’s economy grew by 17% during 2009-2013, trailing San Jose (20%) but outpacing most other fast-growing peer regions around the country, including Portland (15%), Charlotte (14%), Nashville 13%), Denver (10%), Seattle (9%), and RDU (5%).

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National forecasting firms predicted “slow down” for Austin MSA economy in 2015…not so fast?

Total nonfarm employment in Austin has increased by 22,100 jobs so far in calendar year ’15 (YTD July) and by 30,900 jobs compared to July 2014.

2013 Jul

2013 Sep

2013 Nov

2014 Jan

2014 Mar

2014 May

2014 Jul

2014 Sep

2014 Nov

2015 Jan

2015 Mar

2015 May

2015 Jul0.0

1.0

2.0

3.0

4.0

5.0

6.0

Job Growth, 12-Month % Change

Source: Bureau of Labor Statistics (CES). Total nonfarm employment, seasonally adjusted.

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Austin Economy: Partying like it’s 1999

• Unemployment rate in Austin (city) was 3.0% in June—lowest period of unemployment since dot-com era.

• Sales at Austin (city) businesses up nearly 5% in 2014 from 2013.

• Real average wages in Austin MSA increased by 1.6% in 2014 and are finally nearly back to pre-dot-com bust level (> $54,000/yr).

Sources: (1) Bureau of Labor Statistics (LAUS). Not seasonally adjusted. Data is for portion of Austin in Travis County. (2) Texas Comptroller. Gross sales, adjusted for inflation. (3) Bureau of Labor Statistics (QCEW). All industries, adjusted for inflation.

6http://www.kauffman.org/microsites/kauffman-index/rankings/metropolitan-area

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Small business receipts topped $43 billion in 2012

Austin MSA 2011 2012 Change Growth

Firms 31,118 32,451 1,333 4.3%

Employment 228,414 238,285 9,871 4.3%

Payroll $9.4 billion $9.9 billion $500 million 5.7%

Receipts N/A $43 billion N/A N/ASmall businesses (<100 employees) make up 92% of all firms, 35% of total employment, 29% of total payroll, and 20% of total receipts in Austin MSA.

Source: U.S. Census Bureau (SUSB). Payroll adjusted for inflation (2012 Dollars).

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Small Business (< 100 Emp), Austin MSA Employment % Total Emp

Accommodation and Food Services 39,352 46%

Professional, Scientific, Technical Services 32,510 47%

Health Care and Social Assistance 28,416 34%

Construction 21,233 55%

Retail Trade 18,963 21%

Admin/Support/WMRS 14,000 24%

Manufacturing 11,778 31%

Wholesale Trade 10,105 24%

Small business share of major industry sectors

Small businesses (<100 employees) make up 92% of all firms, 35% of total employment, 29% of total payroll, and 20% of total receipts in Austin MSA.

Source: U.S. Census Bureau (SUSB). Payroll adjusted for inflation (2012 Dollars).

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EmployeesRespondents

Number*DifficultyAverage

ConfidenceAverage

1 to 10 19 3.1 2.8

11 to 50 15 3.5 2.5

51 to 125 7 3.6 2.4

126 to 500 6 2.5 2.8

501+ 3 2.3 3.7

Total (Ans) 50 3.1 2.7

Source: ATC Tech Talent Employer Survey. Second-stage firms have reached a growth stage of $1M to $50M in receipts and 10 to 100 employees. For more on second-stage company research see Edward Lowe Foundation at http://edwardlowe.org/who-we-serve/secondstage. *Complete responses only (n = 50). Differences not statistically significant.

1 = Not difficult2 = Somewhat difficult3 = Difficult4 = Very difficult5 = Extremely difficult

1 = Not confident2 = Somewhat confident3 = Confident4 = Very confident5 = Extremely confident0 = I don’t know

Overall, how difficult is it to find qualified people to fill job openings at your company in Austin?

How confident are you that Austin will be able to meet your future workforce demand?

ATX Challenge: Growth-stage tech small businesses feeling disproportionate impact of hiring difficulty

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Big Ideas for Small Business in Austin

• How can we leverage opportunity of Medical School and Innovation District for small businesses?

• How can we facilitate participation of small businesses in education & workforce partnerships?

• SBDP is one of best city-managed small business programs—what’s needed to keep pace w/ growth?

7600 Burnet Road, Suite 108Austin, Texas 78757

@civicanalyticshttp://civicanalytics.com