New small businesses continue to make Tomball and Magnolia home, as both cities have seen a large increase in the number of businesses opening in the last year.

Within the last year, 1,139 businesses started in Tomball and 745 in Magnolia, according to the database Reference USA. In the last two years 2,211 businesses started in Tomball and 1,474 in Magnolia. A majority of the new businesses popping up in the cities filed as home work sites as opposed to commercial sites, illuminating a continuance of small business coming to the region.

"The growth has been tremendous especially in the downtown area," said Mary Harvey, owner of Granny's Korner in Tomball and president of the Tomball Business Association. "The downtown is really thriving. There must be a reason new businesses are coming here, because they are."

The growth of small business in the area is important to cities such as Tomball and Magnolia as it brings in sales and property tax revenues and is the driving force behind the local economy, said Bruce Hillegeist, president of the Greater Tomball Area Chamber of Commerce.

"I do not know an exact percentage, but about 90 percent of the businesses in Tomball are small businesses," Hillegeist said. "There are 27 million small businesses in the United States and that really is the driving factor and backbone of the US economy. And the same goes for Tomball."

Sales tax

In the last fiscal year, Tomball brought in $17.6 million in revenue, $8.6 million of which was derived from sales tax, Tomball City Manager George Shackelford said. The city brought in $1 million more in revenue than projected for the 2012-13 fiscal year due to an increase in sales tax revenue, he said.

The business growth in Tomball is evidenced by the increase in sales tax revenues brought in by the city, Shackelford said. Another reason Tomball has seen an increase in revenues, he said, is due to the growth and development in the region, which has brought more people to the area.

"Sales tax makes up for about 45 percent of the general fund," Shackelford said. "Whether you are getting gas, eating or shopping in Tomball, the money you spend goes back into the city through sales tax. Every dollar spent in Tomball helps keep [property] tax rates low."

The general fund—which is made up of funds generated from property tax, sales tax, fees and services, and fines—is used to pay city administrators, police, fire, public works officials and for community services, he said.

The more sales tax revenue generated, the better it is for the city, he said. After the general fund expenditures are paid, the remaining balance can be used for unintended expenditures, road and city improvement projects.

"Small businesses are extremely important to us, as well as the big ones," Shackelford said. "The stronger the businesses are, the stronger the city is."

Holiday shopping

Of the $8.6 million brought in by sales tax revenues in the last fiscal year, roughly $2.1 million was brought in as a result of tax revenues from the months of November and December, according to the Texas comptroller of public accounts. Shackelford said this is a result of people shopping and spending money in Tomball during the holiday season.

"Every year the February check is higher and we see a spike in sales tax revenues, because the February check includes sales from the month of December," he said.

Money spent in the community is often times regenerated within the community multiple times, Hillegeist said.

"Getting people to shop locally is one of the main mantras of the Greater Tomball Area Chamber of Commerce," Hillegeist said. "We really try to persuade members of the community to shop locally and to put money back into the community."

Shopping landscape

In the past, the business community in Tomball did not offer multiple options for the consumer to do holiday shopping, but that has changed, said Sandy Krug, owner of Classic Hair. Larger retailers such as Kohl's and Marshalls have helped change the shopping landscape in Tomball, making Tomball a more appealing destination to shoppers, she said.

"Last year I went down to the Spring Cypress Kohl's and spent a lot of money on Christmas shopping," Krug said. "But this year I will not have to do that again, because I have that option in Tomball now and can keep my money in the city."

Since last holiday season, stores such as Game Stop, Lane Bryant, Rachael's Hallmark and The Children's Place opened in the Tomball Marketplace.

"These are the types of places that come Christmas time people are going to shop at," Krug said. "When people have a bigger variety to choose from, they are going to stay in town to shop because they want to keep their money in the community."

Hillegeist said the growth in business both large and small has made Tomball a shopping destination for those in the area.

"There is often a mindset that as a consumer in Tomball you have to go to off of FM 1960 or down to Houston to find better deals and more variety," Hillegeist said. "But that is just not true anymore. I can guarantee you can find what you are looking for locally."

Having the larger retailers and national chains popping up in Tomball not only helps the city, but also helps the small businesses in town, Krug said. Krug has owned Classic Hair for 29 years and has moved her location four times. She is now in the Tomball Marketplace and moved there once she knew it would have bigger stores, knowing it would give her business more visibility and exposure.

"The bigger stores that have come to Tomball have definitely helped my business grow," Krug said. "The success of any business in the city helps the success of other businesses. The more businesses there are, the more traffic comes through town, which brings more visibility to your business and makes it more successful."