Fort Worth sees startup rate increase, as national rate decreases

Courtney Fillmore Fort Worth Business Press

Less than 6 percent of unemployed managers and executives were willing to give self-employment a shot in the first half of 2014, but that hasn’t stunted the growth of startups in the Fort Worth-Arlington area. Hayden Blackburn, director of IDEA Works FW, has seen great interest among individuals of every age and background in starting their own business. IDEA Works FW is an incubator that assists emerging businesses in entrepreneurial development, job creation and supports innovation-driven operations. “Some are students, some want to be their own boss, and some have worked in an industry for over 20 years and are out of work, exploring how they can use their expertise in a field,” said Blackburn.

“Fort Worth and North Texas has a growing and expanding startup scene and community. We have had a surge in growth in the infrastructure available to entrepreneurs with many organizations and programs launching that are filling gaps in the needs of our entrepreneurial community,” said Blackburn. These “gaps in needs” have been filled with incubators, co-working spaces, accelerators, and funding channels that have the shared mission of supporting local startups, according to Blackburn. A recent quarterly survey by global outplacement consultancy group Challenger, Gray & Christmas found that during the first and second quarters of 2014, an average of 5.5 percent of job seekers started their own business. This is significantly lower than the startup rate for the second half of 2013, which averaged 6.9 percent per quarter. “The startup rate can fluctuate significantly from quarter to quarter. In the fourth quarter of 2013, for example, nearly 9 percent of jobless managers and executives started a business. The percentage then dropped by 50 percent in the following quarter,” said John A. Challenger, CEO of Chicago-based Challenger, Gray & Christmas in a news release. “However, the overall startup rate is trending upward from record lows in 2011, albeit slowly. Even with the increase, though, less than 6 percent of job seekers, on average, are willing to try their hand at entrepreneurship,” said Challenger. And the entrepreneurial lifestyle is not for everyone, agrees Blackburn.

“Startups and the entrepreneurs that own and operate them face consistent challenges, no matter the industry,” said Blackburn. “Most face challenges around capital, marketing, taxes, and time and resource management.” Despite these challenges, the Fort Worth-Arlington micro-division (Johnson, Tarrant, Parker and Wise counties) has experienced growth in the number of small firms, according to the Texas Workforce Commission. “As of May 2014, the Fort Worth-Arlington micro division had over 18,000 firms with one to four employees which made up 3.9 percent of the total employment,” said Blackburn. As the unemployment rate has fallen from 6.2 percent to 5 percent, the number of startups has increased, but the percentage of startups as a percentage total employment has decreased. That may change, according to Challenger.

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“As the economy and job market continue to expand and we get closer to full employment, self-employment will begin to rise again, as the confidence factor increases and the risk factor decreases,” said Challenger. “We may be on the leading edge of that increase.” Many areas of the country are already approaching full employment, and in these markets, “jobs are plentiful, but so are the opportunities for prospective entrepreneurs,” said Challenger. A growth in entrepreneurs also requires a solid support infrastructure, noted IDEA Works’ Blackburn. “When a city has an ease of starting a business, ease of obtaining capital, and a well-integrated and robust entrepreneurial ecosystem with a culture among citizens of innovation, acceptance of failure, and a strong entrepreneurial spirit it can lead to those exploring launching a business officially taking the plunge into the lifestyle,” said Blackburn.