Entrepreneurship is changing Portuguese business life, with younger companies playing an “increasingly relevant” role in the national economy. The conclusion is from Informa D&B, which analyzed data on company creation over the past decade and concluded that of the 419,000 companies created between 2012 and 2022, about 69% are in the transportation, real estate, ICT (technology and information) and construction. Not only did more than half of them reach adulthood, but together they contributed to 15% of the jobs created in the country.
“The creation of new businesses is one of the reflections of the vitality of each period of the country’s economic history. With this study of entrepreneurship over the past decade, we wanted to understand how new businesses enrich this process, whether in terms of their sector dynamics, or in its ability to grow in terms of business and job creation,” said Informa D&B General Manager Teresa Cardoso de Menezes. Its contribution to greater openness of the national economy to the outside world is also highlighted, as one in ten new firms exports in the first year of operation.
Informa D&B says the past decade in Portugal has been one of “robust and consistent growth” in entrepreneurship, up 17% over the previous decade, and with new business creation rising from 29.2 thousand in 2012 to more than 46, 5 thousand, in 2022.
More importantly, while the pandemic has “significantly affected” this business segment – which fell in 2020 and 2021 – Portugal has already managed in the past to achieve its second best ever figure in company creation . Also noteworthy is the “sharp increase” in the creation of technology companies, which more than doubled, going from 1,300 new companies in 2012 to more than 3,000 in 2022. In ten years, almost 21,000 technology startups were created.
Industry reconfiguration is also visible in data from sectors such as wholesale and retail, responsible for 9% and 16% of new businesses created in 2012, contributing only 5% and 10% respectively in 2022. Industry also lost ground, with only 5% of new constitutions, down from 8% in 2012, as did agriculture, whose contribution to entrepreneurship fell from 5% to 3%.
On the other hand, transportation, which only accounted for 3% of new businesses in 2012, accounted for 9% of new businesses in 2022. The annual growth rate of this sector was 16.5%, the result of an “overwhelming ” increase in the activity of “individual passenger transport in light vehicles” (TVDE).
In terms of employment, despite the fact that 90% of new businesses have only natural persons as partners, the data shows that they were responsible for 15% of jobs created in the country between 2017 and 2021. At stake are the 1.4 million new jobs created in the national economy during this period and together with young companies, that is, those founded five years ago or less, they have hired four out of ten new employees (41% of the total), above the contribution of mature companies (up to 19 years old) and mature companies (over 20 years old), which accounted for 32% and 27% of new jobs respectively.
Special emphasis in this regard on the real estate activities, accommodation and catering and general services sectors, areas where the contribution of new businesses to job creation was 31%, 22% and 20% respectively. If we combine the jobs created by young companies, companies that have been around for five years or less have created 62% (six out of ten) of new jobs in the real estate sector over the last decade and 53% (more than five out of ten ) in accommodation and restoration.
Smaller and more exporting
But not everything is bigger this decade. New companies have even reduced their size: in 2022, almost half of them had a share capital of less than a thousand euros, compared to only 33% in 2012. The number of employees and turnover also fell, with both indicators falling by 20% in a decade.
On the other hand, they are born with a greater export vocation. In 2021, 10.3% of companies exported in their first year of operation, up from 9.5% in 2012. Exports account for an increasing share of these companies’ activities, rising from 50% in 2012 to 63% in 2021. ICT distinguishes itself at this level, with an export percentage of almost a third in the first year of life.
Informa D&B also concludes that new companies experience “fairly rapid” growth in the first years of life. After five years, their turnover is five times higher than in the start-up year and the number of employees has doubled. More than half of new businesses in the past decade survive the first 5 years of operation, with 51% of the total managing to mature, he adds.
Ilídia Pinto is a journalist for Dinheiro Vivo
Source: DN
