Monday, March 5, 2012

Business As Usual


Inbal Doron

An examination of the number of active businesses in a city and their survivability rates over time provides an indication of the strength of the city's business sector. Identifying those sectors of the economy in which businesses have higher survivability rates can also be instructive.

In 2010, approximately 34,700 businesses operated in Jerusalem. This was lower than the 2010 figure for Tel Aviv, where about 64,700 businesses operated, and higher than for Haifa, where about 20,000 businesses operated. The economic sectors with the highest numbers of businesses in Jerusalem were real estate and business services (26%), trade (20%), health, education, and welfare (14%), and transportation and communications (11%). These sectors are more dynamic than others, with a large number of business openings and closings registered annually. During 2010, a total of 912 new businesses opened in the sector of real estate and business services, representing 28% of all new businesses. During the same year, 616 businesses from this sector closed, representing 23% of all the businesses that closed. In the trade sector, 727 new businesses opened (23%) and 656 closed (24%) during this year. In total, more than 3,200 new businesses opened in Jerusalem and about 2,700 closed during 2010. These numbers were lower than the figures for Tel Aviv, where more than 6,300 businesses opened and about 4,450 closed.

What are the chances of survival for a new business? The data indicate that of all the new businesses opened in Israel in 2005, approximately half closed by 2010. A similar trend took place in Jerusalem, where the survivability rate of a new business was 89% in the first year, 75% in the second year, 65% in the third year, 59% in the fourth year, and 52% in the fifth year.

Rates of survivability vary among the different business sectors. Jerusalem businesses in the education and health sector and in the banking and finance sector enjoyed relatively high survivability rates, with 67% surviving past five years. In contrast, the survivability rate of businesses in the hospitality and food services' sector that had opened in 2005 measured only 35% in 2010.




Source: Analysis of Central Bureau of Statistics data

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