One of the defining aspects of 2020 will ultimately be that it was incredibly difficult for small businesses. As stated in our look at Small Business Saturday after Thanksgiving, many have had to scale back operations, if not shut down completely. It’s been a tough time, and one that will take a long while for some to recover from.
On the other side of this, however, is opportunity. Odd as it may sound, it’s a documented phenomenon that following significant crises and economic recessions, we tend to see spikes in startups, innovations, and even the creation of what will come to be major companies. Indeed, Huffpost looked into companies started in a recession and produced some names that might surprise you: Microsoft, Disney, CNN, and Apple, to name a few.
This would seem to indicate that there’s a reasonable chance we’re looking at significant business innovation in 2021 — and possibly the emergence of a few new businesses that, years from now, will be household names. This may well happen all around the country, and possibly much of the world. As we look at the state of the U.S. with regard to new business opportunities though, it’s Texas that looks to be in position to lead a post-COVID business boom.
The simplest reason for this assertion is that many will be exploring the idea of starting their own businesses as the economy begins to re-energize, and Texas offers a startup environment that has proven its versatile appeal in recent years. This is partly because of the breadth of new companies that have found success there. “From Midland’s oil fields to the tech scene in Austin,” as ZenBusiness’s new business startup guide for Texas put it, there is entrepreneurial spirit in the state. Not too many states can claim startup success across the spectrum from oil and energy to new tech. This not only makes Texas attractive as a place where entrepreneurs have found success, but also opens the state up to a wider range of potential business founders.
The scope of the success we’re seeing in key industries in Texas — in addition to the breadth of relevant industries — is another key factor in all of this. Regarding “Midland’s oil fields,” Texas is still big in the oil and gas business. But it is also, even more importantly, becoming a leader in the transition to clean energy. According to a Dallas Observer article on the state of Texas energy, the state actually produced more energy from renewable sources than coal in 2019! And as for the “tech scene in Austin,” let’s just say it’s become trendy to refer to the beloved city as the next iteration of Silicon Valley, and with good reason. This means that Texas is not just home to a range of industries, but particularly prominent in two in particular — clean energy and tech — where so much startup energy today tends to be concentrated.
And then there’s that terrific tax situation that is so often cited when people discuss what’s helped the tech scene to thrive in Texas. In the simplest of terms, Texas does not have a personal income tax, and its corporate income tax is considered somewhat light as well. This means first and foremost that business owners in more expensive states have incentive to migrate to Texas, and have in many cases been doing so. But it also means that people hoping to start businesses during and after the recession, who will likely be operating with tighter budgets than usual, might find Texas favorable.
Taken all together these things add up to a perfect environment for a post-COVID business boom. Texas supports an unusually large range of industries, is finding particular success in some of the most active and important ones of our time, and supports entrepreneurs financially in ways not many other states do. We’ll see more new businesses taking advantage of all of this and setting up shop in Texas in the next year.
