2020 is a year that many economic players (and French people in general) want to forget... with a few exceptions! Indeed, the number of business start-ups is booming, despite a context of large-scale economic crisis.
Explanations.
No crisis seems to resist the dynamism of French entrepreneurship. Despite a historic recession recorded in 2020 (estimated between 8% and 10% according to the government), business start-ups are showing remarkable resilience, with a 4% increase compared to the previous year.
More than 850,000 businesses were created in France during the year, including 35,000 more entities compared to 2019. Most of these are young people working under the legal status of micro-entrepreneur.
According to the INSEE (French National Institute of Statistics and Economic Studies), "Individual business creations are increasing sharply (+5.6%), while company creations are slightly decreasing (-0.2%)." Indeed, the French clearly prefer individual businesses: their number has increased by 6%, with 630,000 creations. They represent about two-thirds of the total number of companies created.
Despite a 4.2% drop in the number of companies created in December, even the last quarter, marked by a new lockdown and numerous health restrictions, shows an upward trend.
The Covid-19 economic and health crisis has brought the concept of creative destruction back into the spotlight, inspired by the economic thinking of J. Schumpeter. The destruction of many traditional jobs is accelerating the shift of the economy towards the growth of entrepreneurship.
Although these are small businesses, many independent jobs are emerging and contributing to creating a lot of wealth.
According to a survey by OpinionWay, 20% of French people say they want to start or take over a business in 2021.
As in 2019, nearly a quarter of registrations concerned the "business support" sector. Car and motorcycle repair shops come in second place, mainly due to the rise of the bicycle market (a popular alternative to public transport, especially in large cities).
The "Transport and Storage" sector comes in third place, due to the growth of meal delivery drivers and VTC drivers in large cities. Also, some employees have lost confidence in their employer's ability to guarantee them a stable source of income and have decided to start their own businesses.
Another significant trend: real estate and retail are sectors that stand out due to their dynamism! On the other hand, the education, health and social action sectors are showing a decline compared to their 2019 performance.
Is France becoming a nation of entrepreneurs? There's definitely a growing trend.
Is it a solution in times of crisis? Entrepreneurship is seen as a palliative for many employees placed on short-time work, or forced to cease their activity by an administrative closure.
On the other hand, the bankruptcy rate remains relatively low in 2020, in proportions slightly lower than those observed in 2019. The main challenge is therefore to train new entrepreneurs in business management, to ensure their sustainability in the medium and long term. The year 2021 also looks promising and full of hope on the entrepreneurship front!
Written by our expert Paul LASBARRERES-CANDAU
February 22, 2021
