2023 turning point in entrepreneurship, economy cools off

In absolute figures, the number of companies registered in the Business Register is still rising. On 1 January 2024, there were 2,522,782, compared to 2,395,231 one year earlier, which is an increase of 5%. It is worth to note here that the proportion of self-employed people is increasing: 66.7% at the start of 2023, versus 68.1% one year later.

Joris Knoben, professor of Strategy and Entrepreneurship at the Tilburg School of Economics and Management, says: "The number of businesses continues to increase, but growth is clearly levelling off. The rise in the number of closedowns is particularly striking. All in all, these are clear signs of a cooling economy."

Bankruptcies

The number of bankruptcies rose sharply in 2023. In 2022, there were about 2,000 bankruptcies. Last year, there were over 3,300, an increase of 64%.  This increase is significantly higher than that in 2022 (21%). The increase was strongest in retail (+159%); culture, sports and recreation (+114%); and the hospitality industry (+101%). On the other hand, there were also many startups in the retail sector.

"The number of bankruptcies is returning to the level before the corona period," Knoben observes. "The need to repay corona support and deferred taxes is ending more and more businesses. This growth in bankruptcies, especially in the sectors hit hard by corona, has actually been expected for some time."

Healthcare, hospitality industry, and construction stand out

The biggest dynamics are in the sectors of healthcare, the hospitality industry, and construction. Healthcare stands out, with the largest decrease in the percentage of startups (-17%) and at the same time the strongest increase in the percentage of quitters compared to 2022, namely 21%. 

"These developments in healthcare could be related to the growing attention for the negative effects of (false) self-employment in healthcare," Knoben says. "The Cabinet and sector organisations have made concrete agreements to curb the hiring of self-employed professionals in healthcare. It would be logical if, as a result, the number of startups decreases and many self-employed professionals without staff quit."

That the hospitality industry is not having an easy time is again clear from the business dynamics over 2023. Compared to 2022, there is a 15% increase in the number of quitters and the sector is struggling with a higher than average number of bankruptcies.

Knoben: "Businesses in the hospitality industry are struggling. Competition is fierce, not only with other hospitality establishments, but also from delivery services and supermarkets. As a result, it is often difficult to raise prices while costs, such as rent, salaries, and energy, are rising. As a result, margins are under pressure and so relatively many businesses fail."

Finally, the construction industry experienced an exodus in the past year. There is no increase in the number of startups compared to 2022, but a sharp increase in the number of quitters, by 19%. 

"Construction seems to be suffering from limitations in new construction. The demand for new houses is huge, but due to permit problems and cost increases, construction is still limited," Knoben explains.

Want to know more? Read the full KVK Annual Report Business Dynamics 2023 (in Dutch).