30% fewer companies were created in Spain than 15 years ago

The Spanish economy grew by 5.5% in 2022. Last year, 278,900 jobs were created, but only 285 new companies opened per day, five fewer than a year earlier, according to data released this Monday. General Council of Notaries Public in your report Business survival 2007 to 2022 and company creation 2022.

Its experts point out that as many as 104,998 companies opened their doors for the first time in 2022, which is 1.7% less. In the case of Galicia, there are 4,031 companies, 5.6% below the last record. Some figures they attribute to “a normalization after two erratic and erratic years stemming from a rapid recovery in 2021.”

However, the entrepreneurial muscle in Spain has lost strength compared to the end of 2007, before the financial crisis. The state creates 30% fewer companies than 15 years ago. Currently, financing costs, labor costs and even the guarantees required by banks to start a project are higher than they were then. And this can be seen in the ambition of entrepreneurs.

According to the latest notary statistics, not only are fewer and fewer companies being opened, but there are also fewer of them. Three out of four (75%) start their work with less than 4,000 euros of capital, compared to 67% in 2007, tapping into one of the main problems that has plagued the Spanish economy for decades: its massive fragmentation and inability to create big business champions. Entrepreneurs today start their adventure with 23% less money than back then.

Not just that. According to the submitted data, no liquidated business in 2022, considering the number of new openings, it increased from 13.2% in 2007 to 32.5%, which is a record for the entire series. And those who persevere do so through hardship, often.

How can it grow employment with less business dynamics? National Institute of Statistics (AND NOT) gives some hints about this. In the last quarter of 2022, employment increased by 20,000 people in the public sector, while it fell by 101,900 in the private sector.. For the whole year, this ratio amounted to 50,700 or 228,200 new employees. The public offer of employment remains a strong engine that creates jobs.

Lifetime

What is the life expectancy of a Spanish company? Only 0.6% of new businesses close before they turn one year old. 1.1% die in the first two years, and 1.5% do not exceed the third year. 98.5% are able to maintain their activity for more than three years after lifting the gap. “The survival of a company is more likely when the share capital is larger and the number of founders is smaller,” notaries explain.

Although the creation of companies has slowed down, those that remain active are recording very juicy earnings. As revealed on Monday Bank of Spain, net turnover increased by 41.3% in 2022. “This positive evolution is observed in all sectors, although the dynamism of the energy sector stands out,” says the organization. These extraordinary profits are in contrast to the country’s historic rise in prices, which would reportedly increase the company’s operating costs.