As your Chattanooga Chamber of Commerce, we strive to be a voice for local businesses and support our community, especially in the face of challenges.
Between March 20 and April 27, we asked businesses to tell us about their ever-changing situations, so we could continue our work helping to establish strong footing for pandemic recovery. More than 250 responded.
From May 18 to 29, we caught back up with these businesses in part two of our Hamilton County Economic Impact Survey exploring the new normal. This time the response was greater, with more than 300 businesses sharing experiences.
"Chattanooga is very fortunate because we have such a diverse market from an economic standpoint," says Charles Wood, Vice President of Economic Development, Chattanooga Chamber.
Our survey results show the stark reality of tough work ahead – and also the optimistic spirit of our community.
"It's been impressive to see the community rally at a time when it's hard to do that, especially if you think about the responsibilities around social distancing," Wood says.
The Chattanooga Chamber's 2,200 business members represent more than 100,000 employees throughout Hamilton County, so our business response rate offers critical insights.
The impact of the COVID-19 disease on business operations and revenue in the Chattanooga region is widespread. Decrease in revenue/sales is the most cited impact at 79% as compared with 85% in Survey No. 1 followed by economic downturn and impact on business.
Hospitality, personal services, hospitals and health care, retail and advertising were industry sectors reporting the most severe impacts.
The most frequently cited business impact continues to be a decrease in revenue followed closely by the economic downturn and the wellbeing of employees.
Although anxiety about the future is high, the numbers are headed in the right direction. When asked to anticipate the severity of overall impact from COVID-19 on a 10-point scale, where 1 is minimal impact and 10 is possible business closure, 15% of respondents reported a level of 10 as compared with 22% in the first survey; 12% as compared with 15% reported a level of 9; and 12% as compared with 15% reported a level of 8. While the nature and severity of impact vary by sector and specific business, COVID-19 continues to cause widespread business disruption.
Employers expect significant changes to the work environment as businesses reopen. With schools, daycare and summer camps closed, the new normal will have a significant impact on how businesses operate. About 61% of employees are teleworking more than pre-pandemic and some 60% of employers plan to maintain some teleworking for employees. Some 12% of business owners plan to reduce office square footage. Many large employers are phasing employees back into the office slowly with some not planning to reopen until after Labor Day.
This spring, unemployment hit record highs in the Chattanooga region, reporting the following regional numbers:
* Chattanooga MSA: 13.3%
* Cleveland MSA: 13.5%
* Dalton MSA: 20.5%
* Dayton/Rhea County: 24.5%
* Athens/McMinn County: 17.3%
Tennessee's highest unemployment occurred in Sevier County at 29.5%. There's one bright spot: Hamilton County and MSA daily job postings started a slight upward trend beginning in June.
A wide range of emotions correlate with businesses reopening — some take a conservative approach with others ready to welcome guests and return to a physical work environment. Going forward, it's clear many employers will offer more flexible work options.
• 73% reported decreased revenue in both surveys
• 15% changed operational systems as compared with 19% in first survey
• 8% reported no impact as compared with 5% in first survey
• 7% reported increased revenue as compared with 2% in first survey
• 37% decreased revenue by 76% or more — first survey results only
• 36% decreased revenue by more than 50% as compared with 60% in first survey
• 28% of businesses have closed as compared with 30% in first survey
• 47% expect to be closed five to eight weeks; 43% for more than nine weeks — first survey results only
• 32% laid off or furloughed employees as compared with 40% in first survey
• 31% expect their business will be impacted for four to six months as compared with 34% in first survey
• 51% expect business to be impacted for more than seven months in first survey; 32% expect the impacts to last more than 12 months in survey No. 2, with 23% unable to predict
• 48% report they will reduce variable cost as compared with 50%, and 44% state they will reduce fixed costs as compared with 42% in survey No. 1
BUSINESS CONCERNS & NEEDS
* Accurate and Timely Information — Accurate and timely information continues to be important as businesses learn how to apply for loans and grants. Initially, uncertainty about repayment and reopening requirements was high.
* Loans/Grants — Access to working capital with speed and efficiency in processing is the greatest need. Exactly 97% of our surveyed businesses were aware of the CARES Act program and 70% felt the Paycheck Protection Program was most beneficial. Of those surveyed, 61% applied for funding.
* Support for Displaced Workers — Employee layoffs in some sectors have been deep. Business owners are concerned about how this will affect the economy after government incentives are no longer available and unemployment remains at record highs.
Much is still unknown, but one thing is clear from our data – businesses want decisive, effective government action in response to both the health and economic implications of COVID-19. Then, they will be better able to adjust plans and position for recovery.
SECTOR IMPACT: INSIGHT FROM BUSINESSES
While COVID-19 has posed difficult challenges, our business community proved its resilience, adopting innovative means to stay in business. From banking to accounting, information technology to marketing, professional service firms have transitioned to remote work environments and are busy helping clients respond to urgent issues. Pioneer Technology, a Chattanooga- based IT managed-services provider, expanded their service offerings when COVID-19 hit.
"Our mission is to establish consistent value for our clients by using our expertise to build strong technology solutions supported by great customer service," says Adam Lloyd, CEO of Pioneer Technology.
Survey No. 2
• 72% of businesses can afford to operate with no new sales for more than 30 days — 10% of businesses can afford 14 days or less
• 6% of respondents plan to cut health insurance benefits for employees to cut costs
• 12% plan to decrease square footage
• 61% of employees plan to telework more than pre-pandemic
• 60% plan to maintain some teleworking for employees
• 28% plan to invite out-of-town friends and family to visit within the next 30 days, 24% in three months, 29% in 2020 and 19% in 2021
• Close to 73% would not be upset hearing an advertisement asking people to visit Chattanooga and 62% feel safe welcoming visitors to Chattanooga — with 36% expressing excitement about it
When the pandemic began, long-term care and senior living facilities were among the first businesses to experience a major disruption to their residents, administrative staff and nurses. Pioneer Technology had a choice sit back and see how their clients would handle this crisis or innovate new ways to use technology to proactively help.
"It's simply not in our values as a business or as people to leave our clients to solve their own problems when we can help, especially for such an important industry to us as long-term care, which found themselves at the epicenter of this global pandemic."
LaShon Carter, owner of Tiny Tigers Learning Center, also shifted operations to better serve the needs of her students and their parents.
When public schools closed, parents were forced to be both remote employees and homeschool teachers. But that wasn't the only problem. Children were also left with a curriculum to learn for themselves, and many didn't have the resources to do so.
Carter converted her educational readiness program to an online platform, creating lesson plans and scheduling virtual meetings with children struggling to learn from home.
"I walk around the neighborhood talking to my neighbors and asking them what their kids need," Carter says. "When you look at the test scores, you have to ask yourself what you can do to help these kids stay in school."
Businesses like Pioneer Technology and Tiny Tigers Learning Center are two of many examples shedding a positive light on the future of our region as workplaces and businesses adapt.
Amidst news of big changes for businesses – from layoffs to increased remote work — you might think economic development work has slowed. But companies still look to the future of where they want to be located – and many industries are still thriving.
In fact, the Chattanooga Chamber's Greater Chattanooga Economic Partnership (GCEP) initiative has worked on 21 new projects since March 1.
As the economy rebounds, the economic development efforts of the Chamber and GCEP will be more important than ever in supporting new job creation and investment in our region, and efforts to recruit remote workers who can now live anywhere will be an opportunity to continue growing our talent pool.
At ChattanoogaTrend.com, find more information about our survey results and how local businesses continue to thrive in the face of challenges. Results from a third economic survey will also be available.