Most of the companies that were shut down were set up after 2008, a sign recession has not taught entrepreneurs to go to fields that are more predictable and less hurt by economic trends.
“It doesn’t seem odd to me that most of the companies that were dissolved this year are the ones set up after 2008 as, firstly, most of the companies being set up, around 60-70%, go bankrupt after the first 3-5 years and the more so during crisis periods,” says Dragos Cabat, managing partner at consultancy Financial View.
Statistical data also shows that the past six years have shattered the business environment, with the number of dissolved companies being six times higher in 2014 against 2008.
Small and medium-sized companies still suffered the most, with the entrepreneurs who ran these companies lacking the experience of crisis periods. Thus, tax hikes upset their plans and the line between the newly set businesses and yielding ones is still too thin.
Almost 120,000 companies were set up last year, but another 98,000 companies shut down and in the first seven months of this year only 25% of entrepreneurs have survived on the market.
“The big weight of companies set up during the crisis period and unable to survive is also given by the structure of those who set them up. Many people lost their jobs and looked at entrepreneurship as a solution,” explains Dragos Cabat.
This year, most dissolved companies (over 13,000) operated in retail, a business model that does not take a very high initial capital, but that fights with hypermarket chains.
Romania has almost 640,000 companies, but just a little more than 450,000 manage to have sales generating total sector revenue of EUR250 billion.
Half of this sum is generated by only 1,200 large companies that registered more than RON100 million per annum. Virtually, Romanian business rests upon a small pool of experienced companies and on another 380,00 small and medium-sized companies that do not have sales of above RON1 million per annum.
(English version by Catalina Apostoiu)