When a natural disaster strikes, small business owners face questions beyond their personal concerns over their homes and families. They must also address other challenges: Are my employees all right? When do I file an insurance claim for my broken store window? How can I keep the 300 pounds of chicken in my restaurant freezer cold?
Small but Mighty
Two TXST initiatives help small businesses survive and thrive
TXST’s Institute for Government Innovation launched BeforeDuringAfter.com, a new website, this summer to help small business owners prepare, endure, and recover from disasters with guidance for every phase.
Small businesses make up more than 99% of businesses in Texas. Given their importance to the Texas economy, TXST researchers have embarked on numerous projects aimed at helping small businesses launch, grow, and thrive.
“Small businesses are the backbone of our economy,” says Dr. Josh Daspit, the director of SCALEUP, a university-wide initiative to increase the growth of small and minority-owned businesses. “When small businesses grow, communities do better, and we all do better as a result.”
Small businesses are the backbone of our economy. When small businesses grow, communities do better, and we all do better as a result.
Dr. Josh Daspit
Director of SCALEUP
BeforeDuringAfter
The Institute for Government Innovation, which is part of the Department of Geography and Environmental Studies, conducts applied research to solve problems for government agencies and nonprofits in Texas.
Assisted by seven undergraduate and six graduate students, the institute worked for three years to develop BeforeDuringAfter in collaboration with Texas Mutual Insurance, Texas Search and Rescue, Federal Reserve Bank of Dallas, OneStar Foundation, and Wells Fargo.
The website, which is free to users, gives small business owners a checklist for disaster preparation and a timeline for disaster recovery. It also provides a dashboard to find real-time updates during an emergency. The project is meant to improve the resilience of local economies, says Dr. Rebecca Davio, the institute’s director.
“Businesses have huge ripple effects,” she says. “If a business closes, then the employees don’t have a place to work. There may be a dramatic, devastating effect on the community as well if there’s no longer, for example, a place to eat or get groceries. Forty percent of businesses that close after a disaster don’t reopen, so that’s why it’s so important to prepare.”
The website’s “Before” section helps business owners do just that, with instructions for signing up for emergency alerts, getting the right insurance coverage, and developing a continuity plan. From the “During” dashboard, users can run a county-specific search for local resources such as emergency management offices, weather forecasts, and utility-outage maps. The “After” section offers a recovery timeline and a checklist for filing an insurance claim. It also reminds users to consider how they can give back locally.
“That connection between them and their community is ultimately going to be important to their recovery,” says Matthew Pantuso, the institute’s senior grant coordinator.
SCALEUP
U.S. Department of Commerce studies have found that minority-owned businesses don’t grow at the same rate as non-minority-owned businesses—a fact that has resulted in up to 21 million potential new jobs going unrealized.
Through the Center for Innovation and Entrepreneurship, TXST launched SCALEUP to study the reasons behind the impediments that small and minority-owned businesses encounter when growing.
With initial funding from Frost Bank and a multiyear grant from the Ewing Marion Kauffman Foundation, SCALEUP’s multidisciplinary research team has found that lack of access to bank loans and financing for growth are significant factors. Through surveys and in-depth interviews with minority business owners, Daspit and his fellow researchers found that twice as many minority business owners as non-minority business owners used personal credit cards for growth financing. Fewer than 10 percent used bank loans, some because they were unfamiliar with the application process and others because of less confidence in banks.
That mistrust stems from generations of biased treatment from financial institutions, says J.R. Gonzales, a 1981 Bobcat alum and the executive vice chair of the Texas Association of Mexican American Chambers of Commerce, a SCALEUP program partner. He points to the 2008 foreclosure crisis, which was caused partly by predatory lending targeted at minorities.
“I think it would help banks that we have a scientific study that supports what a lot of us in the community have known for years,” Gonzales says. “And the SCALEUP project will help get information to Hispanic-owned businesses in a manner that’s understandable and people feel comes with no strings attached.”
That’s the next step for SCALEUP, Daspit says—developing evidence-based tools to help small businesses overcome these challenges. “We’ve conducted the research, and now we’re focused on using the insights to create tools that help small business leaders grow their businesses. It’s important for us to conduct research that can be used to directly impact our community.”
To participate in the development of small business tools, visit scaleup.txst.edu.