Will Accelerating Growth in New Business Registrations Continue in 2022?
There’s little question that the prolonged pandemic has disrupted the workplace significantly. The degree to which that change is accelerated is now becoming clear as data reflects stark differences between what was and what is.
Between 2010 and 2020, business registrations in Connecticut increased by an average of 5% per year. In 2021, however, business registrations increased by over 20%, thru the end of November, according to an analysis by the Connecticut Data Collaborative of data filed with the Connecticut Office of Secretary of the State.
That dramatic – and likely unprecedented – pace of growth suggests that more people are launching more businesses all across Connecticut. Who is launching those business enterprises, and where, is part of the story of a changing population, and expanding interest in new enterprises.
Monthly new business registrations in Connecticut dipped during early 2020, when COVID-19 first emerged, with a low of 2,196 registrations during April 2020, but accelerated from there. Since April 2020, business registrations have steadily increased, with only several small dips during fall 2020 and summer 2021. Even with these small dips, the number of business registrations in each month of 2021 exceeded the number of monthly registrations pre-COVID in 2019.
Overall during 2021, through November 30, there have been 47,584 business registrations in Connecticut, the most in nearly everyone’s memory. In all of 2020, there were 39,570 business registrations; in 2019, pre-COVID, there were 36,323.
Business registrations are an important element in assessing economic trends and highlight the places, industries and people driving economic growth. The difference between 2021 and 2019 is striking – and hopefully this past year will provide a foundation for even more Connecticut businesses. It is, of course, too soon to tell, given the COVID uncertainties and a myriad of other factors. But as the saying goes, you can’t win if you don’t play. And your economy can’t grow without robust business growth. Step one of the journey is to get started – by starting, and registering, a business.
The U.S. Chamber of Commerce recently observed that “the impact of COVID-19, particularly on the business world, couldn’t have been predicted but has been an incredible learning experience—especially for aspiring entrepreneurs… opening a world of opportunities for business owners to meet consumers’ new and evolving needs.” The New York Times reported this past summer that the “coronavirus pandemic appears to have unleashed a tidal wave of entrepreneurial activity, breaking the United States — at least temporarily — out of a decades-long start-up slump.”
At the height of the pandemic in 2020, the State of Connecticut launched a business-targeted portal, www.business.ct.gov, aimed at smoothing the way for new businesses to learn the ins and outs of registering in the state. Since then, as thousands of new businesses have utilized the site, additional features and information have been added, developing what is described as a “one-stop-shop for business services.”
Comparing each of the past three years by industry in Connecticut, 2021 clearly dominated.
- In the Construction industry, for example, there were 1,695 business registrations in 2019. That more than doubled in 2020 to 3,567, and increased again, to 4,082 in 2021.
- In Real Estate Rental and Leasing, there were 4,294 business registrations in 2019, 6,423 in 2020 and 7,092 in 2021.
- In the Professional, Scientific and Technical Services business category, the number of business registrations in successive years was 2,544, followed by 3,869 and 4,037.
- In the Retail Trade category, business registrations grew from 1,463 to 3,895, to 4,373 in 2021 thru November.
Approximately three-quarters of businesses indicated their industry when registering, so the numbers in some industries may even be larger.
The U.S. Small Business Administration reports that more than 97% of the businesses in Connecticut employ fewer than 500 people each, and that 50% of all Connecticut workers are employed by firms with fewer than 500 employees. The Peterson Institute for International Economics, an independent nonprofit, nonpartisan research organization, has noted that “there is a widespread perception that small businesses create the most jobs in the United States and other advanced economies. Research suggests that it is new businesses, not small ones, that create these jobs.”
From January 2019 through November 2021, municipalities with the highest number of business registrations in Connecticut were Stamford (5,578), Bridgeport (5,497), Hartford (4,091), New Haven (3,942), and Danbury (3,561). Leading the way in business registrations during 2021 (through November) have been the cities of Bridgeport with 2,318 (an increase of 59% from 2019), Stamford with 2,052 (an increase of 23%), Hartford with 1,712 (an increase of 62%), and New Haven with 1,612 (an increase of 47%).
Beyond identifying the leading industries attracting new business registrations, and the communities in which they’re registered, data on the owners is also of interest.
From January 2019 through November 2021, 15% of new businesses identified as woman-owned, 13% as minority-owned, and 1% as veteran-owner. However, businesses are not required to indicate this status upon registration, so the data may be incomplete – which suggests that if the registration forms were revised to require new business registrants to indicate if they are owned by a veteran, or woman or minority-owned, the more complete data would reveal an even more accurate picture.
Based on an analysis of the available data, the largest percentage of woman-owned businesses are in Retail Trade (16%) Professional, Scientific and Technical Services (13%), Real Estate & Leasing (12%). The largest percentage of businesses owned by people of color are in Retail Trade (16%), Real Estate Rental & Leasing (12%), Professional, Scientific and Technical Services (9%), and Construction (9%).
Through the years, Connecticut businesses have contributed an array of inventions from as vulcanized rubber to friction matches, sewing machines to steamboats, lollipops to corkscrews, cylindrical locks to the submarine. Given the volume of new business registrations, perhaps another enduring invention (or more) will emerge in 2022.
Michelle Riordan-Nold is Executive Director of the Connecticut Data Collaborative, a statewide public-private partnership that focuses on ensuring public data is open and accessible. More information is available at www.ctdata.org.