Despite Corona pandemic: 2020 with more start-ups than ever before
The year 2020, which was marked by the COVID 19 pandemic, will go down in history as a record year in terms of the number of new companies founded. More new companies were founded in Switzerland than ever before. The start-up boom was strongest in northwestern Switzerland, and weakest in Ticino.
A total of 46,842 new company entries were recorded in the Swiss Commercial Register, an increase of +5.3% compared to the record previous year 2019. However, while the "lockdown" months of March, April and May understandably slowed the start-up boom, the number of new companies rose From June on the rise again. Thus, a total of 11,682 new companies were founded in the third quarter, which corresponds to an increase of +15.5%. The last quarter of 2020 also recorded an increase of +13.0% with 13,208 companies.
Particularly large number of new companies in German-speaking Switzerland
The major regions of Northwestern Switzerland +10.5%, Central Switzerland +10.1%, Eastern Switzerland +8.4%, Zurich +7.5% and Escape Mittelland +6.0% are enjoying new record figures in 2020 in terms of the number of company founders. Just as Ticino was hit hard by the Corona pandemic, the decrease in the number of new companies in Ticino compared to the previous year is also relevant with -10.6%. Southwestern Switzerland was able to recover in the course of the year and only recorded a slight decline of -0.2% in new startups.
On average, 5.61 startups per 1,000 inhabitants took place in Switzerland in 2020. A total of 10 cantons are above the national average. The canton of Zug (19.91) is at the top by a remarkable margin, ahead of Schwyz (8.85), Appenzell Innerrhoden (8.61) and Geneva (7.75). The Swiss cantons with the lowest start-up rates are Uri (3.18), Bern (3.82) and Schaffhausen (3.92), which found the fewest new companies per 1,000 inhabitants.
Comparison of the last 10 years
Since the slight decline in 2015, the Commercial Register Office has recorded a steady increase in new registrations. In the last ten years, new company formations increased by +18%. The year 2020 impresses with more company formations than ever and proves to be the year with the highest number of formations since the existence of the Swiss Commercial Register (SOGC). The SOGC was first published on January 06, 1883.
Five industries account for 50% of all startups
About 50% of all startups occur in the trades (16.7%), consulting (10.2%), retail trade (8.6%), real estate (8.1%), and finance and insurance (6.8%) industries. The least number of startups is in the activity area of printing and publishing (0.3%), high tech (0.6%) agriculture and forestry (1.1%) and education (1.8%).
With regard to the development of the sectors compared to the previous year, it can be seen that the sectors Marketing and Communication grew the most in percentage terms by +26.0%, Hairdressing and Cosmetics +21.0%, Retail Trade +18.6% and Consulting +14.1X%. Declines were recorded in Other services (travel agencies, freelance activities) -22.4%, Transport and logistics -4.9%, Printing and publishing with -2.5%, Finance and insurance -2.1% and Catering and accommodation -0.9%.
Reasons for the strong increase in company formations in 2020
Simon May, Managing Director of the IFJ Institut für Jungunternehmen, sees the high number of start-ups as a positive signal for a sustainably well-functioning Swiss economy. In the past year, some industries have benefited from the change in economic and social life, May continues. Never before has so much money been spent on sports and leisure articles, and people invested in their personal living space, including IT infrastructure for the home office. Producers and retailers of toys as well as medical and security technology, farm stores, streaming services, audio book providers, delivery services and online trade in general experienced an enormous boom. Despite economically restrictive measures, founders were confident, as evidenced by growth in most industries. In addition, a kind of "shakeout" is currently taking place at economically poorly positioned companies, which is encouraging the founding of new companies.
The annual number of start-ups accounts for about 7% to 8% of all active companies in Switzerland, estimates the Institute for Young Enterprises. These start-ups create around 55,000 new jobs annually, which is equivalent to more than 1% of all employees. Consequently, it is systemically relevant for Switzerland that many new companies are created every year.
Will the start-up boom continue in 2021?
According to Simon May's assessment, digitization will continue to receive an enormous boost. "The way is paved for national and global disruptions. Because beware: the effects of this global economic and social shock will only follow in this still very young year of 2021 and subsequent years," says Simon May. The shutdowns, economic aid and restrictions would initially still act like a dam. This "incubation period" is expected to end when vaccinations take effect, contagions remain sustainably reduced and the return to a new normal becomes a fact, he said. "Then the dam will break and many more new solutions from this pandemic period will find their way to market. 2021 will be truly disruptive and at the same time challenging for all of us," Simon May is convinced.
Source: Institute for Young Enterprises IFJ
