Chattanooga leads Tennessee in growth of new business starts

Chattanooga leads Tennessee in growth of new business starts

New business filings up 32 percent in Hamilton County, signaling future economic growth in region

May 15th, 2017 by Dave Flessner in Business Around the Region

Hamilton County led the state in the growth of new business formations in the first quarter of 2017 with the number of new businesses created this year up by nearly a third from the same time a year ago.

The Tennessee Secretary of State's Office said Monday that 787 new business entities were created in Hamilton County during the first three months of this year, up 32.2 percent over last year's volume. Chattanooga led all major cities in the growth in business starts in the first quarter, although Knox County also showed a healthy 18.3 percent gain in new business filings.

"Chattanooga and Cleveland area are showing very robust growth — some of the strongest growth in both employment and business starts anywhere in Tennessee," said Dr. William Fox, director of the Center for Business and Economic Research at the University of Tennessee. "This (new business filing report) is a good leading indicator and it signals continued economic growth throughout this year. There is nothing in the data we see to suggest any slowdown in either the state or the U.S. economy in the next year or 18 months."

Fox said Southeast Tennessee and metro Nashville are the fastest growing areas of Tennessee.

Tre Hargett, Tennessee Secretary of State, speaks during a meeting with the Chattanooga Times Free Press editorial board.

Tre Hargett, Tennessee Secretary of State, speaks during...

Photo by John Rawlston /Times Free Press.

Eddie Poe uses a motorized blower to dry Innovation District logo paint in the middle of the intersection at Market and E. 11th Streets Wednesday morning. "This is a nine-square design to draw attention to Innovation District headquarters," said Ben Taylor, CDOT assistant Transportation Engineer. The headquarters are to be located in the multi-story Edney Building across from Patten Towers.

Eddie Poe uses a motorized blower to dry...

Photo by Tim Barber /Times Free Press.

The Chattanooga region has benefited by the addition and expansions at Volkswagen, Wacker, Amazon and other major employers, and those investments are now yielding more business startups as well, Fox said.

Last week, Fortune magazine labeled Chattanooga "one of America's most startup friendly cities."

Chattanooga is benefiting from one of the nation's fastest internet services offered by EPB and the presence of a number of business accelerators, incubators and venture capital funds downtown in the city's Innovation District.

Small businesses are also being helped by the growth of some of the region's biggest businesses, which collectively added more than 10,000 jobs in the Chattanooga region over the past decade. The Volkswagen assembly plant has more than 3,200 employees and buys products from area businesses that employ thousands of other workers.

"VW is really the engine that drives our economy and is helping to propel many of our startups," said Jack Studer, president of The Company Laboratory, the downtown business accelerator that works with dozens of new business startups.

Even with the dissolution of other businesses, the overall number of businesses operating in Tennessee was up by more than 5 percent this year over last, Fox said.

Construction employment and business starts have been leading much of Tennessee's gain in both employment and business starts as home starts rebound after the Great Recession. Fox said Tennessee's employment grew 2.2 percent in the past year, outpacing the 1.6 percent growth nationwide.

The growth in employment helped cut the number of unemployed Tennesseans by 3 percent in the past year, according to government figures. But Tennessee's jobless rate of 5.1 percent in March was still 0.5 percentage points higher than the U.S. unemployment rate of 4.6 percent in March.

Statewide, Tennessee recorded 10,372 new entity filings in the first quarter of 2017, which represents an 8.7 percent increase over the same time last year. Tennessee has had year-over-year increases in business formations for 22 consecutive quarters. As of April 1, there were 259,282 active entities in Tennessee, representing a 5.2 percent increase compared to the first quarter of 2016.

"These strong numbers give us a good idea that Tennessee's economy will continue to grow," said Tennessee Secretary of State Tre Hargett. "It's obvious that Tennessee has a climate that continues to attract new businesses."

Contact Dave Flessner at or at 423-757-6340.

This story was updated May 15 at 8 p.m. and 11 p.m. with edits and more information.