Colorado saw a flood of new businesses at the end of last year, but a lot of other businesses also went bust or fell behind, according to a state economic report.
New business filings were up 11.5% from the previous year in the fourth quarter of 2022, according to the joint report from the University of Colorado’s Leeds School of Business and the Secretary of State’s office. At the same time, delinquencies rose 9.7%, while the number of companies closing up shop increased 17%, the data show.
Delinquencies, which indicate that a business is failing to keep up with its registration, could be a harbinger of future problems, according to Brian Lewandowski, executive director of CU’s business research division.
“That's something for us to keep an eye on,” Lewandowski said during a conference call with reporters. “(It’s) still not an alarming number to me, but we look at delinquencies and wonder what that's a signal of. Is it somebody just sort of late on their paperwork, on their renewal, or is it a signal of harder times that some of these businesses are facing?”
The new report shows a mixed bag for the state of entrepreneurship in Colorado as persistent inflation, rising interest rates and a growing tally of layoffs at big companies across the U.S. make it difficult to assess the economic forecast. Job growth is still strong, but cracks are starting to show in consumer spending, according to the most recent data from the Commerce Department.
“There's only so much that we can squeeze out of the consumer to keep propelling the U.S. economy forward,” Lewandowski said. “That's the backdrop that we have as we think about a slow growth environment in 2023.”
The spike in Colorado’s new business filings at the end of the year was impressive, but it’s difficult to draw solid conclusions about what exactly is happening behind the numbers, Lewandowski said.
“We speculate a little bit about people being entrepreneurial or perhaps economic situations that are forcing people to do additional work,” he said. “Is it because they have to start something new? Is it because they feel like it's a good opportunity, a good environment to start something new? That's just information we don't really have.”