Most of the New Firms Are Micro Enterprises: EU Report

The European commision has submitted a report on the EU SMEs based on the statistics provided by Eurostat’s Structural Business Statistics (SBS).

Each year it was found that there is an increase of enterprises of about 1.5 million enterprises , constituting to 9% of the total enterprise population. On the other hand1.3 million enterprises cease to exist each year, constituting to a death rate of 8% of the stock of enterprises.

In 2007, the EU 27 had over 20 million enterprises, with 43 000 of these being large scale enterprises, i.e. 0.2 % of total number of enterprises, indicating that majority is occupied by SMEs.

In the period 2002-2007, an increase of 2 million enterprises (11%) was seen. 99.9% of this increase were due to SMEs. Of these SMEs, 92% were micro, 1.4 million(7%) were small and 1% (22000) were medium sized enterprises. The average number of persons to which income and work is provided by enterprises is 6. It is 2 for micro and 1000 for LSEs.

Within the group of SMEs, a vast majority of the enterprises (92 %) are micro enterprises, employing less than 10 persons. So, the typical European firm is a micro firm. There are about 1.4 million small enterprises, representing 7% of the total stock. About 1% of all enterprises (22,000) are medium-sized enterprises.

On average, an enterprise provides work and income to 6 persons; this measure of enterprise size varies between only 2 in micro enterprises and over 1,000 in large scale enterprises (LSEs).

A net annual growth of 200,000 to 300,000 new enterprises is created in UK business economy, in the period 2003-2005, and the net being increased in next 3 years. Most of the new firms are micro with less than four people. In the period 2001-2005, an average of 75% of the newly created enterprises in Europe had chances of still existing in the market even after 2 years.

It was also found that new firms established by youngsters lead in terms of innovations. And the firms which ceased to exist were found to lack new ideas.

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