If small businesses are the lifeblood of the Florida economy, maybe it’s time for a transfusion.
After racking up impressive numbers of new businesses for most of the past 10 years, Florida start-ups fell off a cliff in 2009. The Sunshine State sustained a staggering net loss of 24,402 business formations in that year. In 2010, Florida also suffered a net loss, though less severe, of 2,194 business formations.
Bottom line? Florida had 26,596 fewer businesses in 2010 than it had in 2008.
That two-year net loss is historic, says Economic Modeling Specialists Inc., a data analysis firm.
“No state has seen that big of a cumulative drop in the last decade,” says EMSI spokesman Joshua Wright.
Nor has any other state come even close to the single-year, 24,000-plus businesses lost by Florida in 2009. The closest is Arizona, which lost 12,717 businesses in that same year.
In Florida, the vast bulk of businesses to evaporate in that era were small construction firms. Nearly 17,000 went away between 2008 and 2010. Also going away were 4,230 finance and insurance businesses, 3,981 real estate businesses and 1,763 firms in the wholesale trade, EMSI said.
A few industries managed to add a modest number of businesses between 2008 and 2010. They are health care (up 2,136), hotels and restaurants (up 931) and retail (up 881).
Such bleak numbers are not meant to pile on to Florida’s misery. In the go-go years up to 2008, 25,000 new business formations a year were routine, and Florida ranked at or near the top in new business creation. Then came the remarkable crash of 2009.
The sharp reversal of new business formations means it’s going to be even tougher to generate much momentum for new jobs in Florida. This state has few Fortune 500 company headquarters. Even if it did, those companies are not hiring much these days. Most big corporations are hoarding cash and waiting for consumers to start spending again.
Florida’s statewide unemployment rate remained stuck at 10.7 percent in July, the same as June, well above the nation’s 9.1 percent jobless rate. Tampa Bay’s metro-wide unemployment rate stands two percentage points higher at 11.1 percent.
EMSI tracks and ranks business formations in every state and the District of Columbia. Not surprisingly, Florida ranked dead last at No. 51 in 2009 (including the District of Columbia).
In 2010, Florida’s rank improved to No. 43, beating out a handful of hard-hit states including Michigan, which finished last with a net loss of 5,480 businesses. To put Florida’s woes in perspective, that same year 21 states and Washington, D.C., actually reported a net gain in new businesses.
Some economy watchers say this is the time when more people are inclined to start new businesses. Why? Well, more people have lost jobs, need to do something or feel this is the best time to give their business dreams a shot. Also, costs now are lower to start a business and hire people.
There is no question that the Tampa Bay area is abuzz these days with entrepreneurial talk and a growing number of programs available to help new businesses get started and sustain themselves.
A new report issued last week by Florida TaxWatch predicts that Florida will add 150,000 jobs from June 2011 to June 2012. That’s a 2 percent growth rate, but it’s half the pace of job creation Florida experienced in the third year after the recessions of 1990-91 and 2001.
There’s progress. But Florida’s days back in the sun are still a ways off.
~St Petersburg Times
