Note: This article is part of our State of the City project, in which The Dallas Morning News explores the most critical issues facing our communities. Find more topics in our look at the Dallas economy in the coming days.
In August, after months of operating a company at 80% below normal revenues, Hyacinth Belcher decided her small event production business would burn some more cash.
She led her company, Onstage Systems, in organizing and producing a live, drive-in concert series called the Capricorn Drive-In every weekend for two months featuring local music artists at Dallas’ Fair Park.
The drive-ins were a different kind of investment — it was a way Onstage Systems could offer even furloughed staff a chance to work “and to have purpose during a horrible experience for our live-events industry,” Belcher said.
The company’s initiative also had a multiplier effect, generating work for musicians, janitors, security guards, parking attendants and other personnel who staffed the park for the events. And it set off a chain reaction — radio stations took notice and started hosting drive-ins at Fair Park, Belcher said.
Small businesses employing 500 or fewer workers, like Belcher’s, have been an integral part of the Texas economy over the past decade. They provide jobs to roughly half of all Texas workers and drive innovation in communities like Dallas.
Small businesses “can take chances where large corporations won’t because the numbers don’t look right,” Belcher said.
Onstage Systems is one of the fortunate ones, surviving the turbulent pandemic year by reducing staff and evolving its business model. But as of April, about 27% of small businesses operating in Dallas in January 2020 were still closed, according to data compiled by the nonpartisan Harvard-based nonprofit Opportunity Insights.
The ability of small businesses in Dallas to bounce back in the coming months and years may depend on a rebound in consumer mobility and continued relief efforts.
Nationwide, 77% of surviving small-business owners expect to exhaust their second round of Paycheck Protection Program funding by the end of June, and a majority are confident that their businesses will survive.
But only 1 out of 4 owners — 26% — are confident that they can retain current employment levels without more government assistance, according to an April survey of thousands of small businesses by Goldman Sachs.
Dallas Mayor Eric Johnson said the city’s small business continuity fund, created in response to the pandemic, provided $5.6 million in grants to 539 businesses and $1 million in loans to 32 businesses. The fund targeted businesses with $1 million or less in annual revenue.
More than 200 Black-owned businesses were helped, Johnson said.
“We will continue to look at other ways to directly support small businesses going forward,” he said in an emailed statement. “But most of the aid will come through the federal government or through available federal funding provided to the city.”
‘It just kept going’
Federal aid over the course of the pandemic became a lifeline for small-business owners scrambling to cover the costs of keeping workers employed — for those businesses that could get it.
Dallas companies received billions of dollars in assistance from the U.S. Small Business Administration in targeted programs like PPP and Economic Injury Disaster Loans.
The private sector also mobilized to collect and distribute aid to struggling small businesses. The Communities Foundation of Texas, for example, partnered with the Dallas Entrepreneur Center Network to provide millions for primarily minority- and women-owned small businesses.
“That was money that was raised and put up by corporations and individuals in our community because they recognized that small businesses are the lifeblood of our economy, and if we didn’t step up to help them, our economy would suffer,” DEC Network co-founder Trey Bowles said.
Bowles, who has worked in Dallas’ entrepreneurial space over the past decade, conceded that not every small business will make it through to the other side. For Onstage Systems, the assistance Belcher received was used up by the end of April, she said.
“We thought this would be over in three months originally, and it just kept going and going, and getting worse,” Belcher said. “We still need funding.”
At the end of 2020, Johnson identified startups as a specific way Dallas could grow future employment and innovation.
He set up a task force to come up with a public-private plan for Dallas to attract, retain and support businesses at the earliest stage of growth. The group laid out a 10-year road map that, among other things, establishes paid liaisons in city offices to represent venture capitalists and entrepreneurs.
The plan’s big idea was the creation of a more than $50 million privately managed “Fund of Funds” to invest in startup launches. It was inspired by similar funds in cities including Houston and Ann Arbor, Mich.
Bowles, a member of the task force, said the city’s focus on supporting nascent companies will yield job growth that will keep Dallas competitive with its peers.
Implementing the plan will fall to a proposed 15-person advisory board that Bowles and Mandy Price, his task force co-chair and co-founder of Dallas-based diversity and inclusion firm Kanarys, will appoint in conjunction with the mayor within the next three months.
Recovery projected to outpace U.S.
Small businesses create up to 60% of new jobs nationally each year. The pandemic took a greater toll on small businesses in high-density urban areas on the East and West coasts than those in mid-American states like Texas, according to an Intuit Quickbooks analysis of small-business bank deposit activity.
But there’s reason to be optimistic.
Restrictions are lifting, vaccination rates are increasing and small businesses nationwide are recovering — even if unevenly. Small businesses in close contact with the public and customers are recovering more slowly than non-public-facing companies, according to Intuit.
On average, small businesses in Dallas were still bringing in nearly 30% less revenue in April 2021 than before the pandemic, according to Opportunity Insights data. That’s an improvement from April 2020, when government restrictions, pandemic anxiety among consumers and other factors drove a 50% plunge in revenue.
The Dallas economy is projected to grow at a rate surpassing the nation in coming years, with small businesses playing a major role in that expansion, said veteran Waco economist Ray Perryman. Dallas was one of the top metros in the U.S. for small-business job creation in April, according to the Paychex | IHS Markit Small Business Employment Watch.
“For those that can adapt to the changing environment and find needed workers, the outlook is excellent,” Perryman said. “On the other hand, economic expansion will exacerbate labor shortages, which will cause challenges and rising wage and salary costs.”
In spring 2020, Dallas-based Fluellen Cupcakes went into a “downward spiral,” according to owner Keith Fluellen. He closed two of his three locations in Dallas-Fort Worth and took on the role of head chef himself.
“I have more money in the bank than I ever did with the three stores and less headache,” Fluellen said.
The accountant-turned-bakery owner said both SBA assistance programs — PPP and the Economic Injury Disaster Loan program — helped float his trimmed-back business through 2020, and he thinks Fluellen Cupcakes could be ready to expand again by the start of 2022.
Fluellen said he’s been able to hold on to his mostly part-time staff at the bakery’s sole location in the heart of downtown Dallas by increasing pay to $15 an hour.
“If I can do $15 an hour, you should be able to do it anywhere,” he said. “I just felt good. I just felt like I couldn’t celebrate if we did $3,000 on Saturday for the last couple of Saturdays and then they’re making $7 to $8 an hour. It just wouldn’t feel right. But they celebrate with me because they’re getting a good value.”
Features in our State of the City project’s look at the Dallas economy:
Small business: Can small businesses bounce back
Real estate: Why building homes in Dallas is tough
Income: Wages are rising, but not for everyone
Q&A: Mayor Eric Johnson discusses the Dallas economy
Sunday: The pandemic didn’t negatively affect everyone
Sunday: Cities must approach today’s workforce differently
Sunday: Can we expect a year of record job growth?
Sunday/Editorial: How Dallas can change its economic mobility problem
Sunday/Opinion: Alfreda Norman discusses emphasizing local partnerships
Sunday/Opinion: Cullum Clark discusses what suburbs can teach Dallas