Over the past year, there has been a 20 percent increase in the number of business owners who have closed their companies, according to Statistics Netherlands (CBS). The closure figures peaked in the third and fourth quarters, which is most likely due to the stricter coronavirus measures that came into place from mid-October onwards.
Catering industry faced increased business closures in 2020
Since the coronavirus pandemic began, 14.000 business owners have closed their businesses, especially in the catering industry. Amongst restaurant owners, 470 have shut their businesses permanently, which is 10 percent higher than in the previous year. Meanwhile, 450 smaller catering establishments like cafes, lunch eateries, snack bars and ice cream parlours have also ceased operations.
Many sole proprietorships ceased operations
The catering industry was not the only sector to take a major hit – advertising, communications and webshops have also seen a decline in numbers. According to CBS, the majority of these business owners were freelancers, self-employed people who ran sole proprietorship or zelfstandige zonder personnel (ZZP).
Marjolijn Jaarsma, researcher and spokeswoman of CBS reasons that "A decision to quit can be easier for a sole proprietorship than for a company with 5000 employees."
An entrepreneur who operates a small company, including those without any personnel, can prevent serious financial problems by simply closing their company. In this case, a sole proprietorship that goes bankrupt pays the debts themselves, in contrast to those who run a private company.
Fewer bankruptcies in 2020
On the other hand, CBS notes that only 2.703 businesses went bankrupt in the so-called “corona year”, which was 16 percent less than the previous year. Sole proprietorships are not usually included in this data - the figure of bankruptcies is 3.178 including sole proprietorships, which is still less than in 2019.
More companies started than stopped
And the good news! Although there’s been a sharp increase in companies closing, 280.000 entrepreneurs registered a new company with the Chamber of Commerce in 2020. That’s a higher number than the number of companies that stopped!
Although the pandemic has caused a downturn for many businesses, statistics show that 2020 also proved to be a time of new beginnings for many entrepreneurs starting a business.