Newtown Business Closings Mirror State’s Record-Breaking Trend

From long-time business neighbors like Joy’s Hallmark store in the Sand Hill Plaza, to relative newcomers like the Red Brick Tavern in Sandy Hook and the Newtown Chocolatier in Ricci’s Shopping Center, Newtown saw a growing number of businesses throwing in the towel in the past year.

But the trend of both new and long-established businesses closing was by no means a phenomenon reserved for Newtown.

Secretary of the State (SOTS) Susan Bysiewicz reported July 20, that in the first half of 2009, 6,944 businesses shut down, setting a new record for the first half of any year since these figures were first recorded in 2000. This represents a 17 percent increase in the number of business failures from the first two quarters of 2008.

In the second quarter of this year, 3,467 filed papers to dissolve, just under the 3,477 to shut their doors in the first quarter of this year. Meanwhile, 6,937 new businesses incorporated between April 1 and June 30 of 2009, slightly less than the 6,941 start-ups in the first quarter.

Business starts in the first half of 2009 declined 9.6 percent from 2008 figures.

“Obviously, this is still a difficult economic climate for our state’s entrepreneurs, but we may be starting to see the recession bottom out,” said Ms Bysiewicz, Connecticut’s Chief Business Registrar. “While 2009 may yet set the record for most business failures, it appears the severity of both the number of closures and the decline of new business start-ups is lessening.”

Saying the latest trending provides “a glimmer of hope for our economy,” Ms Bysiewicz said Connecticut’s small businesses still need help now to reduce costs and create a more favorable climate for profitability, particularly in areas such as health care and utilities.

Ms Bysiewicz, who is currently exploring a possible run for governor next year, said Connecticut also needs to continue to hold down unnecessary taxes and fees, and continue to offer financial incentives to enter new areas of business such as green technologies, life sciences, and alternative energy sources.

The monthly figures contained in the Business Starts Index released by the Secretary of the State’s Office are available online at www.sots.ct.gov. The statistics show that in April 2009, 1,521 businesses filed paperwork to dissolve their company, followed by another 929 in May and 1,017 in June.

Connecticut experienced a 13 percent increase in the number of business failures in the second quarter of 2009 over 2008 data.

The number of new business starts declined in comparison to previous years. In the second quarter of 2009, 4 percent fewer businesses filed incorporation papers than in the second quarter of 2008, when 7,224 businesses opened their doors.

These figures represent the lowest number of second-quarter business start-ups since 2003. They show that in April 2009, some 2,412 companies filed incorporation papers in Connecticut, followed by 2,152 in May and 2,363 in June.

After reviewing Ms Bysiewicz’s report, Don Klepper-Smith, Chief Economist and Director of Research for DataCore Partners LLC and chairman of the Governor’s Council of Economic Advisors said, Connecticut is still facing the headwinds from a national recession, which I believe is in the process of bottoming.

“Over the near-term we’ve seen the continued loss of jobs, a lackluster housing market, and a risk-averse lending environment,” Mr Klepper-Smith said. “Business attitudes have remained cautious as a result. This data on business starts and stops confirms the overall tenor of economic growth that we’ve been seeing. Hopefully, confidence measures, which generally lead to overall economic activity, will start to improve from here, suggesting that business formation could improve in 2010.”

In her assessment of the report Ms Bysiewicz said, “Small businesses have created over 90 percent of all new jobs in Connecticut in the last ten years and they are the engines of our economy.

“We owe it to the entrepreneurs of our state to make it easier for them to do business by reducing the high cost of health care and energy,” Ms Bysiewicz added. “This is a crucial goal we must meet if we are to reverse the economic trend we have seen over the last year.”