The number of business closures in Connecticut jumped 34 percent in the first quarter of this year, compared with the same timeframe last year, while business starts dipped 5 percent, state data shows.
In the first three months of this year, 3,275 businesses dissolved, up from 2,442 during the same span last year, according to figures tracked by the Secretary of the State’s office.
More than half of this year’s first-quarter closures came in March, when there were 1,655 business stops. January saw 832 business closures while February brought 788, data shows.
“That’s something that bears watching,” Peter Gioia, vice president and economist at the Connecticut Business & Industry Association, said. The number of business stops was surprising, he said, particularly the jump in March.
Many times, when the state experiences a large number of business closures within a short timespan it can be attributed to construction companies, he said. Construction firms often will open separate, new business entities for individual projects — so the entire company is not at risk should something happen to a particular project. When that’s the case, though, Gioia said the business stops typically come in the summer or fall.
By comparison, March 2014 had 958 business closures while January had 930 and February had 554 last year, according to the state data.
As the number of businesses closing rose, the number of new businesses opening in Connecticut dipped in this year’s first quarter.
There were 6,185 business starts in the first three months of the year, down nearly 5 percent from 6,497 in the first quarter of last year.
Weather likely played a major role in that trend, said Gioia. The state had a particularly cold and snowy winter this year, which lasted well into March.
“That certainly has an effect” on businesses being able to open, Gioia said. “I’m not surprised, given weather conditions.”
Openings did show an uptick from month to month in the first quarter of this year, according to the data. There were 1,892 business starts in January, followed by 2,037 in February and 2,256 in March.
CBIA leaders have voiced concerns this legislative session about tax increases included in the proposed state budget that they say will further deter business owners from setting up shop here.
If the cost of doing business here continues to rise, Connecticut will lose businesses to other states, according to CBIA.
There are several efforts under way to assess and strengthen the state’s business climate.
The Finance, Revenue and Bonding Committee has passed S.B. 1137, which aims to create a Connecticut Competitiveness Council that would be tasked with assessing the state’s economic advantages and disadvantages.
That bill was referred to the Office of Legislative Research and Office of Fiscal Analysis on May 5 after being unanimously voted out the Finance committee.
At the same time, CBIA, chambers of commerce and business leaders from throughout the state have launched the CT20x17 Campaign, a nonpartisan effort that aims to make Connecticut a “top 20” economy in the nation by 2017.
In a recent open letter to state lawmakers, members of the CT20x17 coalition wrote: “Unfortunately, we have experienced budget deficits followed by tax increases. This has become a disincentive for new business investment. We don’t want to again watch companies, jobs, and taxpayers move out of Connecticut, making future fiscal crises all but certain. Please end this vicious cycle.”
