Business Failures Fall — But So Do Starts
Closings decline 20% in first half of 2010
HARTFORD — If you are a glass-half-full person, you will be heartened by the news that business survivability has apparently improved in Connecticut.
According to figures released last month by the office of Secretary of the State Susan Bysiewicz, the number of Connecticut businesses shutting down in the first half of 2010 was 19.26 percent below the figure for the same time period in 2009.
Between January 1 and June 30 of this year, 5,606 companies filed papers to dissolve in Connecticut, compared to 6,944 that dissolved during the first two quarters of 2009. However, over the same period 13,544 businesses filed papers to incorporate in Connecticut — a decline of 2.5 percent compared to the same period in 2009, when 13,883 new companies were started.
According to Bysiewicz, whose office functions as the state’s chief business registrar: “We are still looking for net positive growth in the number of new businesses starting up, but I am confident that given time we will get there. Credit availability is still a problem for many entrepreneurs, as are the high costs of health care and energy.”
The decline in business closing can in part be attributed to the fact that many financially weak companies were already driven out of business by the first storm waves of the current recession. In April of 2010 some 1,080 Connecticut businesses filed papers to dissolve, followed by 723 in May and 821 in June. In April of 2010 some 2,327 businesses filed papers to incorporate, followed by 2,086 in May and 2,224 in June.
The decline in business failures is essentially good news, but what we now need to see is business expansion coupled with tangible job growth and associated gains in income,” observes economist Don Kleepper-Smith of DataCore Partners in New Haven, who chairs the Governor’s Council of Economic Advisors. “On a year-to-date basis the broadest measure of consumer spending power, real disposable income — income minus taxes adjusted for inflation — is down about 2.0 percent as of the second quarter, and so many have been unable to differentiate recovery from recession.”
“Our businesses — particularly small businesses [that] have created over 90 percent of all new jobs in Connecticut in the last ten years — are grappling with escalating energy prices, health-care costs and the continuing difficulty of obtaining credit to start new ventures and hire new workers,” said Bysiewicz. “We must improve the business climate in Connecticut and bring down some of these staggering costs.”
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