Economy

Survival rate of Hungarian businesses declines

July 25, 2019, 8:44 am  english version Hungarian version  
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The survival rate of Hungarian businesses is getting lower as only 72% of newly-founded companies reach 5 years and 48% get to 10 years, company information provider Opten said.


Although the number of new companies and the willingness to found new businesses remains high, long-term survivability is still a problem, according to Richárd Pertics, company information director at Opten.

According to Opten, there have been 25,000 to 30,000 new businesses launched annually in recent years, substantially less than in the early 2000s. However, the falling trend has stopped and at times appeared to reverse in the past few years.

Aside from natural selection, planned processes also contribute to a lower survival rate as mergers and acquisitions decrease the number of companies, but this turns out not to be a major factor. Most businesses going under are either abandoned or liquidated by creditors.

On the other hand, a small number of new businesses become successful very soon: 1% of businesses founded in 2013 had revenue of more than HUF 1 billion after five years of operation. Moreover, the ratio of such companies is rising, which means that the expected life path of new businesses is increasingly differentiated, Pertics said.

Due to the relatively low average lifetime of businesses, 46% of currently active companies is less than 10 years old. On the other hand, 23% are more than 20, up from 20% in 2018.

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