2020 is a year that many economic players (and French people in general) would like to forget... with a few exceptions! The number of business start-ups is booming, despite the current economic crisis.
Explanations.
No crisis seems to resist the dynamism of French entrepreneurship. Despite a historic recession in 2020 (between 8% and 10% according to the government), business start-ups are in fine fettle, with an increase of 4% on the previous year.
More than 850,000 businesses were created in France during the year, including 35,000 additional entities compared to 2019. Most of these are young people working under the legal status of micro-entrepreneur.
"Sole proprietorship creations are up sharply (+5.6%), while company creations are down slightly (-0.2%)", states Insee. Indeed, the French preference for sole proprietorships is clearly confirmed: their number rose by 6%, with 630,000 creations. They account for around two-thirds of the total number of businesses created.
Despite a 4.2% fall in the number of new businesses in December, even the last quarter, marked by reconfinement and numerous health restrictions, showed an upward trend.
The economic and health crisis of Covid-19 has revived the notion of creative destruction, inspired by the economic thought of J. Schumpeter. The destruction of many traditional jobs is accentuating the economy's shift towards entrepreneurial growth.
Although these are small businesses, many independent jobs are being created, and they're helping to create a great deal of wealth.
According to a survey by OpinionWay, 20% of French people say they want to start their own business or take over a business in 2021.
As in 2019, nearlya quarter of registrations were in the "business support" sector. Automobile and motorcycle repair businesses came second, thanks in particular to the boom in the bicycle market (a popular alternative to public transport, particularly in big cities).
The "Transport and warehousing" sector comes in third place, due to the growth of meal delivery and VTC drivers. VTC drivers drivers in major cities. Also, some employees have lost confidence in their employer's ability to guarantee them a stable source of income, and have decided to set up on their own.
Another striking trend: real estate and retail are sectors that stand out for their dynamism! By contrast, the education, healthcare and social services sectors are showing a decline compared to 2019 performance.
Is France becoming a country of entrepreneurs? There's a clearly identifiable trend.
Is it a remedy in times of crisis? Entrepreneurship is seen as a palliative for many employees forced into short-time working, or forced out of business by an administrative closure.
On the other hand, the bankruptcy rate will remain relatively low in 2020, in slightly lower proportions than in 2019. The main challenge is therefore totrain new entrepreneurs in business management, to ensure their medium- and long-term survival. The year 2021 also promises to be encouraging and hopeful on the entrepreneurial front!
Written by our expert Paul LASBARRERES-CANDAU
February 22, 2021
