Between taxes, financing and the dreaded red tape, it has long been said that France is simply not the place the start a new business.
However, a report this week by Ernst & Young consultants found that in some ways, France actually leads the world in making it simple and efficient for entrepreneurs to get a venture off the ground.
For example, France ranks above all other G20 countries for how its education and training systems contribute to business.
To get some expert analysis, The Local spoke to Liam Boogar, the Paris-based American co-founder of Rude Baguette, a blog on French start-ups.
'No better time than now to start a business'
Liam Boogar. Photo courtesy of Rude Baguette
“The idea of France being this place where it’s just impossible to start a business is definitely exaggerated,” says Boogar.
“I’m an immigrant, and I run a company in France.”
“Yes, certain things are inconvenient, but if you can’t get over bureaucracy, then maybe you weren’t meant to start a business,” he adds.
“Anyone who finds paperwork insurmountable definitely wouldn’t be able to handle the truly difficult aspects of running their own business, and they would probably fail to start one anywhere in the world.”
“No government in the history of the world has ever been 100 percent pro-business. And no business will ever tell you that they succeeded because of the government,” says Boogar.
“So if you’re waiting for the climate to change in some way that makes starting a business easy, and completely problem-free, forget it. There’s never going to be a better time than right now.”
Simpler and quicker to start a business in France
Besides, Boogar says, it’s actually far easier to start up a business in France than you might think, and in some ways, the French lead the way for simplicity and efficiency.
“First, France is phenomenal and above par for making interactions with the state digital, and bringing administration online,” says Boogar.
“It takes 15 minutes to do your taxes online in France, and as well as that, it’s free, unlike in the US, where you have to pay a private company like Turbo Tax.”
This is borne out by the Ernst & Young report, which found that there are just five administrative steps needed to start a business in France, as opposed to an average of 7.6 among the G20 countries.
Furthermore, it takes an average of just seven days to start up in France, as opposed to 22 days in the G20 on average. The financial cost, as a percentage of income per person, is ten times higher in the G20 than it is in France.
Both the report and Boogar point to France’s CIR (Research Tax Credit) as a major boon to research and development.
Since being launched in 2004, the CIR has “generated total tax savings for businesses of more than €5 billion” by “allowing a 30 percent deduction on the first €100 million of R & D expenditure,” according to Ernst & Young.
For smaller businesses, however, trying to get off the ground, the costs can be heavy.
Indeed, Ernst & Young rank France 16th out of 20 when it comes to ‘Access to Funding,’ with the United States ranked first.
Boogar, though, points to recently announced changes to banking policies in France.
“It used to be the case that if you had a previous business that failed, banks would place a black mark against you when it comes to future lending. But now that’s changing,” he says.
'If you try to limit failure, you end up limiting success'
That “embrace of failure”, as Boogar calls it, is all part of a country’s ‘Entrepreneurship Culture,’ to use Ernst & Young’s label.
On that measure, France ranks in ninth place among the G20 and, new financing policies aside, it’s an area Boogar admits the French need improvement in.
“First of all, ‘entrepreneurship culture’ doesn’t mean absolutely everyone is encouraged to start a business,” he says.
“If everyone in the population owned a business, there’d be no employees, and obviously that wouldn’t work.”
“But to me, entrepreneurship culture means the extent to which a country promotes or accepts risk and failure, and we have learned, time and time again, that if you try to limit failure, your end up limiting success.”
“Being allowed and encouraged to take risks is key to starting a business, and having a good climate for entrepreneurship,” he concludes.
Liam Boogar is Cofounder, CEO & Editor of the Rude Baguette, France's start-up blog.