A new white paper released by the CRER looks at trends in small business in Chattanooga since 1978. Small firms are much more numerous in Chattanooga than are medium and large firms, although their number has grown much more slowly. Between 1978 and 2023, the number of small firms grew by 27 percent whereas the number of medium and large firms grew by 82 percent.
There were nearly 36 thousand employees at small firms in Chattanooga in 2023, an increase of 32 percent since 1978, although growth has been flat since the mid-1990s. Employment at medium and large firms grew by 85 percent over the period, standing at nearly 208 thousand in 2023.
Findings of the paper include:
1. Small-firm employment in Chattanooga was hit very hard by the recession of 2008-09. The number of small-firm employees fell by 8 percent and still had not recovered fully by 2023.
2. Six of 19 industries account for 68 percent of small firms and 72 percent of small-firm employment in Chattanooga: Other services; Retail trade; Professional, scientific, and technical services; Construction; and Health care and social services.
3. Small firms are much less prominent in Chattanooga than in Tennessee or the United States. In 2023, 72.3 percent of Chattanooga’s firms were small, while corresponding numbers in Tennessee and the United States were 81.2 percent and 87.4 percent. The gap between Chattanooga and the United States has been growing over time.
4. In terms of employment, small firms have remained less prominent in Chattanooga than in the United States. In 2023, 14.6 percent of Chattanooga’s private employment was in small firms, compared to 16.7 percent of employment in the United States.5.
5. In contrast with the United States, small firms in Chattanooga have been increasing their average number of employees. In 2023, the average small firm in Chattanooga had 5.2 employees, whereas the average small firm in the United States had 4.6 employees.