By: Susan Longworth and Robin G. Newberger
With the help of the City of Chicago’s Department of Housing and Economic Development, in the fall of 2012 the Chicago Fed’s Community Development and Policy Studies (CDPS) unit distributed a survey to community-based, non-profit groups in Chicago to gauge the pre- and post-recession business climate in Chicago’s 77 community areas. The organizations surveyed provide business development services and market support to small businesses in defined community service areas.
Responses varied and indicated that the recession and subsequent recovery has not been experienced by all communities uniformly.
Map 1: Pre-Recession Sentiment
Map 2: Post-Recession Sentiment
Maps 1 and 2 reflect respondents’ recalled sentiment pre- and post-recession. The red areas of the map indicate negative sentiment; the blue areas show positive sentiment; and the pale green areas are neutral.
The poll results showed that for most respondents the recession did not vastly alter their perceptions of the neighborhood business climate.
Half of respondents had positive sentiment about the business climate in their community prior to the recession and remained positive (communities represented in blue both pre- and post-recession). Fourteen percent of respondents had negative sentiment prior to the recession and remained negative post-recession (communities represented in red both pre- and post-recession).
However, approximately a quarter of the respondents who stated that the business climate in their communities had been positive prior to the recession, felt negatively about their business climate post-recession (communities shaded blue pre-recession and red post-recession). Many of these respondents represented neighborhoods on the northwest side of the city, which prompted the need to better understand the dynamics of those communities.
Therefore, in June of this year, CDPS continued its exploration into perceptions about conditions for small businesses by conducting a listening session with representatives from some of the northwest side organizations that had responded to the survey. This discussion was organized with the help and support of local CDC, the North River Commission.
Participants provided valuable insights into the challenges faced by the very small businesses they serve:
• Very small businesses (of fewer than 10 employees) are vulnerable to changes in their markets, including changes in demographics, competition from the Internet, or a recession.
• Owners of very small businesses need access to financial education and affordable financial products.
• Participants lamented the loss of relationships with community banks that were previously active in the neighborhood small business community. They also reported hearing from local banks that very small businesses are seen as too risky and too small to service profitably.
• These businesses draw customers exclusively from their local markets, and accordingly place-making initiatives (banners, street-scapes, etc.) provide important indicators of a vital business community.
Read the full article for an explanation of the methodology and findings.
The Community Development and Policy Studies Division of the Federal Reserve Bank of Chicago has an ongoing commitment support and understand the roles of small businesses in our local and regional economy. Future blogs will feature upcoming work. Click below to read a sample of past articles: