Jul 19, 2023 - Business

Colorado sees business growth, defying national trends

New business applications in Colorado, 2022
Data: U.S. Census; Map: Kavya Beheraj/Axios

Despite challenging economic conditions, Colorado is seeing an increase in new businesses and bucking a national trend.

Driving the news: The state saw a record number of new business filings in the first three months of the year at nearly 56,000, according to an economic indicators report from the University of Colorado Boulder. That represents a 38% year-over-year increase.

Why it matters: New business applications are an important measure of an area's perceived economic health. If lots of people are trying to start new companies in a given state, it's a sign that they're bullish on the area's prospects.

The big picture: As of 2021, more than 66.7 million Americans worked for companies with fewer than 100 employees, and those companies posted nearly $3.6 trillion in annual payroll, census data shows.

  • Just over 5 million new business applications were filed nationwide in 2022, or 15.1 for every 1,000 residents, per new Census Bureau and IRS data. That's down about 7% from 2021.
  • Miami (40.9), Atlanta (31.3) and Orlando (28.7) took the top spots for major metro areas as ranked by new business applications per 1,000 residents in 2022.

Zoom in: Colorado's big cities drove the state into positive numbers, but a strong showing in smaller mountain communities contributed.

  • The Denver metro area saw nearly 65,000 applications for new businesses, or 21.6 applications per 1,000 residents in 2022, ranking it just outside the top 10 nationwide, figures show. That's up 3% from 2021.
  • Colorado Springs recorded about 15,000 for a rate of 19.7.

Yes, but: The number of business dissolutions increased to record highs in the first quarter of 2023, up 9% from the same period a year earlier, state data shows.

Between the lines: The boom-bust cycle is a byproduct of a state law that reduced new business filings to $1 from July 2022 through mid-May when funds expired. The cost to renew a business filing remained $50.

The intrigue: Many of the hottest spots for new business applications also have booming populations, as economic growth and population increases tend to go hand in hand.

Yes, but: A filed application is no guarantee of a healthy, thriving business to follow, but at a minimum, it's a sign of economic optimism.

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