New companies in droves – and more of them survive

Dataskjerm med ordet Start, som illustrasjon til artikkel om at det startes mange nye bedrifter i Norge.

29,8% of new companies established in 2012 were still active in 2017, which is a clear improvement from the previous year.

The previous year, the statistics from Statistics Norway (Statistisk sentralbyrå) showed that only 27% of the new companies established in 2011 were still active five years later.

There are still far too many that disappear during the first five critical years, but we see a formidable change from the previous year.

In Miniforetak we work every day to increase the knowledge for you who are running a small limited company or a sole proprietorship.

These are cheerful numbers, but there is a clear reason that they’re here, so keep reading.

140 new companies every single day

The statistics showing the survival rate for the 51.169 new companies that were started in 2012 were recently released.

To make the number of new companies clear:

  • There is an average of 140 new companies every single day a year.
  • Every single hour throughout the entirety of 2012 – on weekdays, holidays and weekends – an average of almost six new companies were started in this country.

The key to the improvement

There is a clear reason for the survival percentage to have made a jump:

In 2012, the requirement for share capital was reduced to 30 000 NOK.

This led to more people starting limited companies.

In 2011 the limited companies made up about 13 000 of the new companies, whereas the number in 2012 showed a whole 20 165 new LLCs.

At the same time, we know that of the new companies being started in Norway, limited companies survive at a much higher rate than sole proprietorships.

Almost half (41%) of the LLCs established in 2012 were still active in 2017.

Worse for the sole proprietorships

For the sole proprietorships, the amount of newly established went down from 29 042 (2011) to 28 562 (2012). It’s still a big amount.

There is no reason to say that there are too few companies being started in Norway, and almost everyone that starts chooses a sole proprietorship or a limited company.

The challenge is that way too few get over the bump from startup to stable run (and/or growth).

To illustrate this: Only 18% of the SPs started in 2012 were still active in 2017.

The first five years are in the startup environment often referred to as “the bloodbath”, and the company has a much greater chance to succeed if it survives this period.

More knowledge about running

Knowledge in the running phase is essential to get through the first, extremely demanding period.

My statement is that many of those who disappear in the first critical years, do this because they know too little about running a company.

I don’t have any studies to lean on, only my own experience from meetings with and teaching small companies in the last decades.

My experience is that the establishers know their subject, but have way too little knowledge about running the company. And way too little time and resources to pay attention to rules and requirements.

Most have 0-4 employees

If the media spends time and resources to write about founders and establishers, it is often about someone who has created a growth company – or about someone who ultimately failed.

The truth is that most are somewhere in between.

The annual statistics from Statistics Norway show that over 80% of Norwegian companies have 0-4 employees.

Individually, they are rarely interesting for the general public, but together they make up the foundation of the Norwegian businesses.

If we could make even more survive, it would make a massive difference for the number of workplaces and development within businesses.

I don’t doubt that among the tens of thousands of companies disappearing each year, there are some potential gazelles or growth companies being sucked down the drain.

Are you running a small company? If so, I’m rooting for you. Very much.

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