Regional Indicator 10: Net New Business Formation

	Why It's Important The number of net new business formations is an important measure of economic and entrepreneurial activity.

Regional Indicator Ten measures net business formation by subtracting the number of business bankruptcies from the number of businesses incorporated in a given year.

After five years of strong growth, the number of new business formations per capita in BC was relatively flat in 2007 and fell by 13 percent in 2008.

BC averaged 5.5 net business incorporations per 1,000 population between 1990 and 2001, a trough year. Growth rates in 2002 through 2004 were above average and a there was a 25 percent jump in 2005. Net incorporations continued to grow in 2006 and 2007 but the pace slowed. There were 6,400 more formations in 2005 than in 2004, 2,500 more in 2006 than 2005 and only 880 more in 2007 relative to 2006. Net formations dropped by 4,000 between 2007 and 2008.

Vancouver accounts for roughly 70 percent of all net incorporations in the province. Regional BC generates another 17 percent and half of the remaining 13 percent comes from Victoria while Abbotsford and Kelowna provide less than four percent each.

Vancouver generates new incorporations well in excess of its 50 percent population share and the other areas of the province, especially Regional BC, generate less than their population shares.