Even as some predict an increase in startups as federal health reform offers tax credits for small-business health insurance, Connecticut dropped in a state ranking of entrepreneurship released late last month, while also faring poorly on a U.S. Census Bureau study of “lone wolf” businesses with no other employees.
Researchers at the University of Nebraska ranked Connecticut 17th among the states for entrepreneurship, down four slots from 2008.
New York held the top slot for both 2008 and 2011, while Massachusetts climbed four rungs to finish third behind Washington state; and New Jersey jumped from 12th to fourth in the study.
Looking up at its neighbors and economic competitors is not a place Connecticut wants to be, according to Catherine Smith, commissioner of the state Department of Economic and Community Development, who addressed the entrepreneurial climate in June at a forum sponsored by the Connecticut Business & Industry Association.
“It”™s extremely important that we focus on nurturing those businesses ”“ making sure that Connecticut is a place for those people to start their business and have access to capital; that the cost of doing business here is relatively reasonable,” Smith said. “We have entrepreneurs in the state ”¦ We have young, innovative talent, some of whom who are leaving the state. So how can we create more opportunities for them here?”
While new business starts lagged in the first quarter in Connecticut from their levels of a year earlier, startup activity appeared to rebound in the second quarter to close the first half with a 3.1 percent gain, according to data from the Connecticut secretary of state.
New data from the U.S. Census Bureau, suggests an element to the recession unexpected in some quarters. Not only were small-business receipts pounded by client spending cuts, but the numbers of “lone wolf” companies themselves declined. That was particularly the case in financial services, in which the number of solo financiers fell fully by 10 percent.
That may come as a surprise to some who opined that no small number of business services professional laid off in the financial panic of 2008 and 2009 would hang out their own shingle, rather than pounding the pavement for jobs that were attracting hundreds of candidates. The Census Bureau study relies on tax return data from the Internal Revenue Service, covering all manner of industries from beauticians to electrical technicians.
In Fairfield County, the one major employment sector to buck the tide was health services and social work, which saw the number of solo companies zoom up 5 percent in 2009.
The average receipts for a non-employer business in Fairfield County plunged nearly 13 percent in 2009 to just more than $63,000, according to the Census Bureau. The very number of those solo businesses themselves, meanwhile, dropped by 1,600 companies or 2 percent to just more than 80,000 total, with the trend since 2003 tracking in sync with the overall economy.
That was down from the national average of a 1.2 percent decline in non-employer companies, which was offset somewhat by Texas, Georgia, Louisiana, and Washington, D.C., which all added non-employer businesses in 2009.
Despite New York”™s lofty perch on the University of Nebraska study, the state fared far worse on the Census Bureau report, losing 24,000 solo businesses in 2009, the most of any state.
