Small businesses are at the heart of Texas’ economy. More than storefronts or workshops, they are community anchors driven by individuals who devote their time and energy to their work.

“Being a small business owner here in El Paso is challenging and rewarding at the same time,” said Rafael Batrez, a local leather artisan and owner of El Paso’s Finest. “It does consume every minute of your life.”

Batrez’s reflection captures the demands of running a small business, a journey marked by relentless effort and an undeniable impact on the economic growth of Texas. 

Small businesses account for 99.8% of all Texas enterprises and employ nearly 4.5 million workers, according to the Texas Association of Business. They also generate more than 40% of the state’s private nonfarm gross domestic product.

That impact is reflected locally. Mirella Tamayo, assistant director of the El Paso Economic and International Development Department, oversees its Small Business Assistance division and emphasizes the significant role small businesses play in the region.

“Here in El Paso, 84% of businesses are small,” Tamayo said. “The segment that we target is those businesses that have fewer than 20 employees. That’s where the 84% comes from. That is a huge chunk of businesses here in El Paso. They are a tremendous part of our economy here and really, across the country. They’re a critical part of our economy here for job creation and innovation.”

El Paso’s Business One-Stop Shop, or BOSS, is a city initiative dedicated to supporting local businesses. The program reports that small enterprises and sole proprietorships employ two out of every five local workers.

Small businesses serve as financial anchors for the region while strengthening and diversifying the broader Texas economy. They also help keep money circulating locally.

According to the National Business Association, 68% of every dollar spent at a small business remains within the local economy. As that money circulates through the community, it supports other businesses and generates municipal tax revenue used to fund public services and infrastructure.

“I have a pretty good relationship with all of the hotels here in downtown,” Batrez said. “With my shop being the only souvenir shop here in downtown, they send all of their clients here, so I get a lot of tourists and people from out of town.”

Texas has no state income tax and maintains a cost of doing business below the national average, according to the Texas Economic Development Corp. The organization also reports that if Texas were a country, it would have the world’s eighth-largest economy.

Although Texas offers a favorable environment for small businesses, many owners continue to face significant challenges.

The Federal Reserve Bank of Dallas notes that small businesses in the state remain financially vulnerable to rising operating expenses, workforce shortages and limited access to capital.

“In communities across the state, we’re navigating rising costs, workforce challenges, a rapid pace of technology change,” Tamayo said. “Small businesses are feeling the pressure from higher cost of labor, inventory and financing. At the same time, employers are competing for talent in an increasingly specialized economy.”

The Rise of E-Commerce

The pandemic caused a widespread shift toward e-commerce that many local businesses were not prepared to make. El Paso’s Economic and International Development Department now provides technology training and other assistance to help businesses expand into online sales.

“All of the businesses had to pivot to e-commerce during the pandemic,” Tamayo said. “Part of our investment is to work with nonprofits that helped those businesses launch a website, a landing page, an e-commerce website. That was a huge help for a lot of businesses. It’s now really a necessity for businesses to ensure that they’re able to serve their clients not just at storefronts but through online channels to compete with larger businesses.

Karina Brasgalla, director of the department, said Buy El Paso Rewards has become one of the city’s most popular and successful programs.

“That was a way that the city was helping with the marketing aspect,” Brasgalla said. “As people have platforms that allow them to shop local, we were helping folks not as quick to adapt to new technologies, make sure that they still have the benefits of having an app-based platform that helps market, helps people access and find local businesses and gives them free rewards for shopping there.”

The Buy El Paso program helps local merchants establish a digital presence while offering shoppers 5% cash back through the Open Rewards app. As of April 2026, the program had generated $4.2 million in direct revenue for El Paso small businesses.

“E-commerce has fundamentally changed consumer behavior,” Tamayo said. “Businesses that embrace digital tools are better positioned for growth.”

Local spending, supportive policies and access to financial tools can create conditions that help small businesses succeed.

In the Upper Rio Grande region, centered on El Paso and the Borderplex, small businesses reflect a binational community shaped by family traditions and cross-border commerce. They contribute to Texas’ economic growth by generating sales tax revenue, supporting minority-owned businesses and connecting the state to the global manufacturing market.

“El Paso has been proactive,” Tamayo said. “We’re investing in entrepreneurship, workforce development and access to capital to ensure our businesses can remain competitive and continue to create jobs. One of the things that we’ve recently launched is an advanced manufacturing incentive policy. We have grants going to businesses to help them get ready to compete for government contracts.”

These initiatives show how strategic local efforts can strengthen small businesses and reinforce their role in Texas’ economic engine.