In France: the Government is Pushing Small Business

Posted by: Stacy Perman on July 25, 2009

In America we like to say that small business is the engine that drives the economy, but in France, not so much. That conventional axiom however has been turned on its head. In January, the French government launched a program called auto-entrepreneur, to help entrepreneurs cut through the traditionally complicated bureaucratic process of starting a small business – as well as easing up on the heavy taxes and social charges usually required. To date, the eiffel.jpgprogram is a success, the government reports that the number of new privately owned start-ups established in June set a record, boosted in large part to the auto-entrepreneur program. By the end of this year, the government says that France is on track to see 500,000 new small businesses launched compared to 328,000 in 2008 and 321,000 in 2007.

On the surface the program seems an innovative injection into a collapsed economy. A report in Time discusses the pros and cons of auto-entrepreneur’s success, which is well worth a look. In March President Obama unveiled a stimulus plan to help spur the recovery of small business in this country. Yet, one of the consistent concerns of economists and entrepreneurs is the series of regulations placed on small business owners that strangle their ability to establish new outfits and grow. Perhaps it wouldn’t hurt to look across the Atlantic for some news ways to lift up American-style entrepreneurship.

Reader Comments

Domenick Celentano

July 26, 2009 08:20 AM

Hi Stacy, on several other Entrepreneur Blogs, research and commentary are pointing toward a change in the mix of small business. For example certain retail sectors no longer are viable due to WalMart, Target, Dollar Stores, etc... the retail world is changing and bifurcating into big box and those niche retailers. So Small Business at retail may no longer be a growth sector is was in the past.

This brings up a more compelling assignment... how do we segment the small business sectors in those areas that will grow given the changes in the economy? In other words, what are the market gaps that small businesses can fill that their larger counterparts can't?

This type of research needs to be done before our government goes head first into small business assistance. AND some other method besides SBA needs to be considered. SBA is way to bureaucratic and realies on banks to make loans... and we know how anxious banks are today (with a bit of sarcasm).

What small businesses really need besides money? Education! Even if money started to flow... too many of these businesses "dont know what they dont know" and therefore could not spend that money in areas of growth.

So there needs to be a concernted effort to have business investment tied to basic skills in marketing, finance, operations.

The analogy... if one chooses to go to business school, there is a core curriculum and a series of electives. The student does not have the choice of cherry picking core curriculum. Why should small business be any different.

Hopefully some others will post comments for a lively discussion, and I will reserve other thoughts till that point...

dom

Becky D

July 26, 2009 08:58 PM

I read the Time article and while this sounds like a great plan to initially start a business, it doesn't sound like it will work with a growing business. As the article stated, once the business grew, they would be subject to the same taxes, etc as regular businesses. Hopefully, before President Obama adopts a similar government plan, he will wait to see how this plays out in France, and see how we're going to afford all the rest of his "stimulus" plans....

Steve99

July 27, 2009 12:34 PM

I, too, think we should wait to see what happens next in France before jumping to conclusions about this, but it's an interesting proposal nonetheless. Maybe we need something innovative that can get a greater number of people to understand current effective online marketing tactics so that they won't shy away from starting new businesses. For example, marketing with online video still seems a bit underused. Startups need to remember that putting videos all over the Internet on YouTube, Veoh, AdWido, Vimeo, and so on can greatly help their brand exposure.

Ivan W. Burwell

July 29, 2009 02:09 PM

I like to remind people that every business was once a small business. Apple Computer started with two guys in a garage; now the company employs millions. The stories are endless and they arise from all over the world.

It’s encouraging to see that the French have taken to encouraging small business development. Here in the U.S. we’ve been the land of small business development for generations and we continue to be: presently the number of minority-owned small businesses is increasing (america.gov/st/diversity-english/2007/December/20071221175918ABretnuH0.3369257.html) and that’s had a great effect across the spectrum. Minority-owned businesses bring new perspectives to the marketplace and allow consumers to try new things that they wouldn’t otherwise experience.

Just a couple generations ago no one in the United States had ever heard of salsa; we simply put ketchup on fries and called it a side dish. Now, thanks to the influence of Hispanic culture and many Hispanic small businesses, we have a wider variety of choices when it comes to dining.

That’s just one example of the ways that culture intersects with the desire to start a small business and makes us all able to expand our experience.

Kelly

July 29, 2009 02:57 PM

In the U.S. in 2007 there were 637,100 new businesses according to the U.S. Small Business Administration Office of Advocacy. That already seems low compared to just one small country such as France. This means small businesses are *already* having a problem in the U.S. Adding to this problem with MORE requirements such as mandated health insurance is not going to help but will definitely hurt small business.

Regulations aren't too bad (yet) in the U.S. for a small business. I've been doing it for over 20 years and worked for small firms before that. There is a good amount of tax paperwork no doubt but only recently has that started to increase with states, counties and others requiring companies to file and report on things like sales tax even if they are not required to collect sales tax in that state. This means as many as 100's of additional tax forms every year if you sell a product nationally like we do! Things like this, along with the expectation that small business "can afford" health care for all employees "can afford" family leave and vacations, etc. will be the straw to break the small business back in America. We can't have it all - and if I have to choose, I'm choosing to KEEP small business alive, not destroy it. Small businesses employ about half of the country’s private sector workforce

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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