Some aspects of SME demography: macroanalysis based on microdata

The small and medium-sized enterprise (SME) sector is highly dynamic: approximately one million new firms are established each year, yet not all manage to survive. This study examines several intrinsic demographic processes within the SME sector. Specifically, it aims to assess the age structure of SMEs and provide a quantitative evaluation of their survival rates. The analysis is based on microdata from SME registries within the span from 2017 to 2023. Each annual dataset comprises over six million observations. To enable macro-level insights from microdata, the authors developed a methodology for collecting and analyzing registry data. The analysis places particular emphasis on the age at which firms cease operations. The findings offer valuable insights into the scale and patterns of natural selection processes affecting newly established SMEs. The resulting estimates may inform prospective entrepreneurs, academic researchers, and policymakers involved in designing support mechanisms for small businesses and fostering a conducive business environment. Key findings include the following: approximately one-third of newly created firms exit the market within the first two years of operation: less than 30% of new enterprises survive to reach five to seven years of age; most new firms begin as microenterprises, which remain the dominant category across all age groups. Among firms of five to seven years, the combined share of small and medium-sized enterprises is less than 4%; the overall age structure of the SME sector is skewed toward younger firms, with this skew particularly pronounced among individual proprietors; the sectoral composition of new firms remains relatively stable over time, with trade, transportation, and construction consistently ranking as the top three industries.

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