Tiffany Pauldon-Banks has operated a successful wedding planning and event business for the past six years in both her native Chicago and in her transplanted home in Chattanooga.
But when the COVID-19 pandemic limited all but small wedding celebrations, Pauldon-Banks decided to pursue her dream of bringing Chicago-style hoagies to Chattanooga. In January, the 35-year-old entrepreneur will open Lil Mama's Chicago Style Hoagy next to Jack Brown's Tavern in the Tomorrow Building on the Patten Parkway in downtown Chattanooga.
"People ask why I would try to start a business during a pandemic, and my thought is it's still a good time because people always have to eat," she says. "I feel like the pandemic has actually opened the door of opportunity by giving me the incentive and the extra time I needed to build this new business, and I know this won't last forever."
Pauldon-Banks is among a growing number of people starting business ventures this year. Unlike previous recessions, which have caused more caution among entrepreneurs, the COVID-19 pandemic has prompted many to rethink who they work for as traditional jobs have been cut. With extra stimulus funds and a belief that the pandemic won't endure, many are deciding to start their own companies.
"We're definitely seeing more interest and activity in starting new businesses — probably 40 to 50 percent more this year," says Hal Bowling, executive director of LAUNCH Chattanooga, a 9-year-old nonprofit group working to encourage more local business startups. "A lot of people lost jobs this year that never expected they would, so the idea of starting a new business is both more essential and more opportune for a lot folks."
The U.S. Census Bureau reports business applications in 2020 are up 38.5% so far this year over last year's levels. Even in a pandemic when many companies were forced to close, the Census Bureau reports there have been 3.2 million requests for employer identification numbers, which is what a business needs to get started. In the same period of 2019, there were 2.7 million such requests for employer ID numbers.
In Hamilton County, 2,447 business filings were made with the Tennessee Secretary of State through the first 10 months of the year, up 13.2% from the same period a year ago. Statewide, business filings for all of Tennessee in the first 10 months of 2020 rose 17.5% from last year to 46,563, according to filings with the Tennessee Secretary of State.
"We've had a 40-year decline (in the number of new business startups) and it certainly would be great with all of the negatives of this year to see an increase in business starts," Bowling says. "I think that is very likely."
As the economy emerged from most of the shutdowns this spring, more people prepared to start businesses in Chattanooga, experts say.
Might as well: Entrepreneurs across the country are going for it, anticipating better days ahead
"Initially this spring we were getting very few inquiries about starting a business, but since July, we're seeing a definite uptick in the number of people wanting to know more about how to start their own business," says Lynn Chesnutt, director of the Tennessee Small Business Development Center in Chattanooga. "Some people whose jobs have been eliminated or who have been furloughed are saying "If not now, when?'"
From March 15, when the pandemic forced many businesses to shut down, through the end of September, the TSBDC has worked with 457 people in Chattanooga, or nearly as many as the 532 that the office served during all of 2019 when the economy was booming.
Chesnutt and Bowling say their organizations have had to switch from in-person to online training and counseling, which has worked in many cases to allow more people to get help more quickly since they don't have to leave their homes or businesses to receive advice or participate in virtual seminars.
"The silver lining coming out of this is that we think people will want to continue to do virtual programs and meetings, and that will make us more productive in helping to serve our nine-county region," Chesnutt says.
Getting to work
The U.S. Census Bureau reports business applications in 2020 are up 38.5% so far this year over last year’s levels. Even in a pandemic when many companies were forced to close, the Census Bureau reports there have been 3.2 million requests for employer identification numbers, which is what a business needs to get started. In the same period of 2019, there were 2.7 million such requests for employer ID numbers.
For Jerry and Erica Evans, the pandemic inspired them to switch businesses and launch a bin warehouse outlet. The couple had previously run an estate sale business helping to price and sell household homes at estate sales across the region. But the pandemic ended most of that business, so the couple turned their selling skills and entrepreneurial drive to their newest venture — Finders Keepers.
In a former car dealership and repair shop warehouse on Hixson Pike, Jerry and Erica Evans now unload a truckload of returned merchandise every week and put from 6,000 to 8,000 items from each truck into 41 wooden bins and sell each item for a declining price over four days each week.
Every Saturday, Finders Keepers opens with every item priced for $5 and then cuts the price to $3 an item on Sunday, a dollar per item on Monday and, for what's left, 50 cents an item on Tuesday.
"We knew we had to do something when the estate sales business pretty much ended and we saw how well this type of business was doing elsewhere," Jerry Evans says. "I wasn't sure at first, but we're gaining a lot of customers now every week and in this current economy I think more people are looking for the kind of bargains we can offer."
Jerry Evans, who says he might even open a second location of Finders Keepers, was able to use the skills he developed in running other businesses in the past to pivot into a new venture. But many others starting their own business for the first time are seeking help from a variety of small business assistance programs.
To help startups, Chattanooga boasts the state's biggest business incubator, one of the first business accelerator programs, and a host of other training and seed capital assistance in and around the Innovation District established downtown to nurture more startups.
"Whenever you have a correction or change in your economy, there are a number of businesses that start up," says Christy Gillenwater, president of the Chattanooga Area Chamber of Commerce, which operates the Chattanooga/Hamilton County Business Development Center and works with startup business groups like CO.LAB and the Enterprise Center and local venture capital groups like the Dynamo and Renaissance Funds. "I think our entrepreneurial eco-system for those businesses is vibrant, particularly for this size community, and hopefully that is helping to create more businesses here."