EUROSTAT BUSINESS REPORT (Second chapter)

How good we are in managing our enterprises? How long our company resist in EU market? How many of them open every year? And, instead, how many of them close? And why?

 

SECOND CHAPTER: Business demography

 

The theory that answers all these questions is called Business Demography, defined as the study of creation (birth) or closure (death) of enterprises every year. These numbers are expressed in percentage of the number of active companies. In 2020 the enterprises birth rate was 8,9% on average, with major peak in Lithuania (18,1%) and minor in Greece (4,6%); from this calculation the activities of holding companies are excluded. On contrary, the death rate was 7,2%, without taking into account merges, take-overs, or any other form of restructuring.

Other important data are the one-year and five-year rate of enterprises survival rates: in 2020, four out of five enterprises born in the previous year in the EU’s business economy had survived their first year: the one-year survival rate was 82 %. This rate was particularly high in Sweden (97 % of newly-born enterprises survived one year), the Netherlands (96 %), Hungary (95 %), Belgium (94 %) and Greece (93 %). By contrast, 64 % of new enterprises in Lithuania survived their first year.

The EU five-year survival rate for enterprises born in 2015 and still active in 2020 was 46%; in other words, slightly less than half of all newly-born enterprises from the 2015 cohort survived until 2020.

 

HOW TO READ THE NUMBERS:

 

Unlike other parts of the world, opening a new company in numerous European countries require a solid business model. This is why we have pretty high one-year and five-years survival rates. Of course, these statistics are closely dependent on local economies, and there are some countries in which enterprises closing are higher than openings.

Please stay tuned to read the rest of the analysis in the next articles.

In the meantime, if you want to increase your business and cut your costs, ask for a free introduction meeting with us!