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Small Business Pulse: BC Bankruptcies Down 15% Compared to 2010

BC Monthly Business Starts

2011 began well with more business registrations than 2010; however the levels quickly came down to the same level as the previous year.  This pattern resulted in an overall growth rate of 1% for 2011 when compared to 2010. A total of 55,924 businesses were registered in 2011.  The average number of monthly BC business starts in 2011 was 4,660.

There were an additional 911 incorporations in 2011, the only increase across the different business types.  Proprietorships, partnerships, and extra provincial incorporations all declined with 124, 139, and 153 fewer starts for these groups respectively.

There were 4,197 registrations in December, a drop of 313 (7%) from November. This drop was faster than December 2010 when there was a monthly drop of 2%.

BC Monthly Bankruptcies

There were 20 BC business bankruptcies in October an increase of 2 from the previous month. This was the second consecutive month where bankruptcies were higher in 2011 compared to the same month last year. This continued the trend we have seen since May 2011, excluding August.

However the good news is that BC bankruptcies over the last 12 months continue to be lower than the previous 12 months, 15% lower. With 199 bankruptcies in 2010/2011 compared to 233 for 2009/10. Although this difference has shrunk from 43% since April 2011.

BC Monthly-Self Employed

The average number of BC self-employed declined in 2011 by 2.5% to 421,000.  In fact BC self-employment was lower for all months in 2011 except May and December. The lowest number of self-employed over the last three years was registered in January 2011, with 401,600.

The number of self-employed rose by 7,000 in December over November to reach 414,500, a 1.7% increase. There were 3,800 more self-employed in December of 2011 compared to 2010, less than one percent difference.

BC Business Starts by Type

Incorporations were the only bright spot in BC business starts for 2011, increasing by 911 or 3.4% over 2010.

Proprietorships, partnerships, and extra provincial corporations (corporations registering from other jurisdictions) all reported fewer business starts than the year before.

The large monthly swings in total business starts were driven primarily by changes in incorporations while proprietorships slowly declined over the year.

In March 2011 incorporations increased by 395 (17%) while proprietorships increased by 248 (7%). However in April 2011, incorporations fell by 594 while proprietorships only fell by 314.

The table below tracks annual results for proprietorships, incorporations, extra provincial incorporations, and general partnerships. As you can see, the Vancouver Olympics in 2010 increased the number of BC businesses starting that year. Proprietorships, for example, more than tripled in growth, from 499 in 2009 to 1,655 in 2010.

Incorporations were also influenced by the Vancouver Olympics. The number registered reversed from declining by 3,359 in 2009 to increasing by 3,103 in 2010, followed by a small increase of 911 in 2011. The same can be said for extra provincial registrations. These registrations almost made up the 2009 loss in 2010 then slightly increased in 2011.

In 2011, 50% of new BC businesses are corporations, 39% are proprietorships, 7% are partnerships, and 4% are from other provinces or outside the country.

As can be seen from the chart below, the 2008 economic recession dropped BC business starts from 4,798 in January 2008 to 3,491 by February 2009, a 1,307 (27%) decline.

In the fall of 2009, registrations began a saw-tooth increase to reach 4,929 by March 2010. Registrations have since stabilized for 2010 and 2011.