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False Calgary business closure numbers may affect business law

Statistics are often used to inform lawmakers and citizens. Figures about the number of businesses that closed during the economic downturn in Alberta are often quoted in business law discussions, but how accurate are the commonly cited numbers? A recent analysis shows that the oft-cited statistic of 7,000 or even 11,000 lost businesses in Calgary may not be as accurate as previously thought.

These commonly mentioned numbers were originally quoted by the City of Calgary's business licensing department. The department provided the number of business licenses that were issued and how many were closed during the downturn. However, this does not necessarily reflect the number of business that closed during that time, as business licenses are non-transferable so a license will be closed if ownership changes in any manner. 

For example, the acquisition of Safeway by Sobeys would have been counted as a license closure by the Calgary business licensing department.The 11,000 number, meanwhile, originated with an uncited tweet. According to data from Calgary Economic Development, a total of 2,435 businesses closed in 2016 while 3,795 new businesses opened. This is similar to the 2015 figure. This high disparity from the 7,000 number explains why experts caution against using licensing data when making business law decisions.

There are multiple methods that may be used to measure data around the number of business closures. Depending upon which are used, lawmakers and business owners may get a starkly different indication of this economic trend. This may lead to business law changes with far-reaching implications. A lawyer can help answer questions about Alberta business laws and provide counsel in the case of a conflict.

Source: CBC, "No, Calgary is not losing 7,000 businesses a year, despite what you've heard", Robson Fletcher, Jan. 15, 2018

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