Entrepreneurship fever, will Spain catch it?
The word entrepreneur sounds more glamorous than it is. What we are talking about is a person who creates a business in order to make a profit or even to make a living. Spaniards have been doing this since the beginning of time but the crisis has woken up the hidden spirit of entrepreneurship among the unemployed, just as it has in other countries since the start of the recession in 2007.
This means that we’ve been forced into thinking for ourselves in order to survive. New businesses are arising from the imperative circumstances instead of a real opportunity in the market –around the 29.4% of the total in Spain. Is this the right path to follow?
According to the Global Entrepreneurship and Development Index, a new study measuring and ranking the entrepreneurial ecosystems for 120 countries around the world, the United States tops the list while Spain occupies 32nd position. The list takes into consideration how easy it is for a startup business to start and do well in a country. It includes access to funding, entrepreneurship culture, tax and regulation, education and training, the number of procedures necessary to start a business and the cost of following through with those procedures. Thirty second is a relatively low ranking considering most of our European neighbors occupy most of the top quartile. Comtemplating the awful state of our economy and employment market with no signs of improvement, can we afford to be poorly organized and weak in this area? Surely creating an environment where entrepreneurs and their new businesses can flourish will create jobs, wealth and prosperity for our country?
Maze of bureaucracy
Anyone who thinks have a business idea in Spain is a challenge is wrong. The true challenge in this country is jumping the bureaucracy walls, becoming a legal entity. The first contact with administration is usually a caos, frighteningly expensive –it can arise till 6.000 euros– and takes a long time – it can take up to and exceeding 9 months to open a business premise although the average time of constitution is 23 days. In Spain we have expert committees for almost everything, but it seems that nobody has been given the responsibility to find an effective employment model that works in our current economic situation. We have a legal system that is often difficult for legal experts to understand new laws and in the same way, we have a complicated process to start a business which takes the energy, focus and time away from entrepreneurs in the most critical part of the new businesses life. We must follow the countries at the top of this list such as the United States, Canada, Australia, UK and Sweden. We need to make it administratively easy for an entrepreneur to start a business with clear understanding.
“Try to keep bureaucracy to a minimum. Business, as well as life, should be fun”
Tax, regulation and policy
The unemployment rate of Spain is 26% including a youth unemployment rate of 54%. Andalucía has the highest unemployment rate for any region in the EU at 36.3%. In total we have more than 6 million people who cannot find work. We have reacted to this by increasing sales tax and personal income tax to pay the unemployed people. Our unemployment benefits system provides incentives for workers and employers to increase labour market turnover and at the same time we protect the worker so much that we make it difficult to fire inefficient employees therefore creating a deterrent for businesses to hire new staff, or even to start in business in the first place.
Do we not look to thriving economies and see how they foster entrepreneurship? How about we create tax incentives for new businesses? Not only corporate tax incentives but low employer and employee taxes for new businesses so that we help these businesses to reduce the unemployment rate whilst at the same time helping them to grow in their early stages of business.
Do our strict employment laws deter employers from employing?
It is estimated that only 60% of employed people in Spain are on a permanent employed contract which of course creates a level of uncertainty and insecurity for many of the 40%. We know that businesses that commit to their employees are rewarded with higher levels of effort, loyalty and productivity but the current employment laws are so strict that they act against the worker by making the employer cautious and reluctant to hire in the first place. In turn, in the work place we have created an environment that does not incentivise staff to develop and improve let alone achieve excellence and prosper. Instead the work culture has become a place to be motivated just enough to get by.
Whilst the labour laws should protect workers from discrimination and unlawful firing, they should make it easy for businesses to hire and fire which will without doubt improve our employment figures and make it easier for new businesses to start up.
Failure means risking, attempting, trying and learning
In a recent search carried out GFK Institute, the main barrier to set up a business is fear of failure (79.4% of respondents) which is understood as a loss of social and professional reputation, disappointment of family and lack of second opportunity. Whereas some countries like the United States show really positive attitude to failure, in Spain failure is defined as a stigma in the same way other Mediterranean territories like Italy:
Immediately you become a loser
We need to recognize that the greatest entrepreneurs are willing to takes risks and fail in order to get closer to success. The CEO of Dropbox famously said, “Don’t worry about failure, you only have to be right once” and I’m sure Mark Zuckerberg, Steve Jobs and Jan Koum would agree. But of course we are not just talking about billion dollar companies, we are encouraging business nature amongst our population, a creativity that is not often rewarded in schools or universities. We are suggesting that if we make it possible for anyone to follow through with their own business, then 47 million minds may produce more successful business ideas than ‘a few old heads in Madrid‘.
“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life and that is why I succeed.”
Entrepreneurship is an attitude
Can someone teach you to be entrepreneur? Are you born as an entrepreneur or it can be learned?
Dreams are not included in the education of children in Spain. We are some way from being a nation that encourages children to follow what you love, what excites them, what makes them happy and what they’re good at. We are too busy armoring children with the skills and education that we guess will be required by corporate businesses, many years later when they graduate. Labourmarket transformation is only possible when empowering people to do what they really want and love to do. This way we can expand the work life legacy around our new generation. We can coach, guide and reward creativity for ideas.
Universities are not prepared to foster and support the students’ business ideas, either to feed the ambition of youth. One of the main differences between US and Spain is 70% of university students want to work for a big company while Americans are willing to become their own bosses. Education has to make ‘entrepreneur’a possible answer for the question:
“What do you want to be when you grow up?”
Access to funding
In Britain the entrepreneurs actively campaigned and eventually, with the help of the UK Government, created a scheme to help young entrepreneurs to get their business ideas off the ground with funding and mentoring. The UK realises that every person in the country is an asset to its future. The next great business, employing hundreds of thousands of people, can come from anyone. Surely it is time that Amancio Ortega claimed the spotlight?
“I’m talking about the power of the ordinary, everyday person to become entrepreneurs and change-makers to set up their own businesses, to seek their own fortune and be in control of their own lives, to say – screw business as usual, we can do it! We can turn things upside down and make a huge difference.”
The best countries at a glance
What should we do in order to give everyone the opportunity to be an entrepreneur? Are we capable to copy and adapt those good practices?
According to Fátima Bañez, employment and Social Security minister, “self-employed and entrepreneurs are included on the ‘roadmap’of the Government”. Despite the new law to encourage entrepreneurship (Ley de apoyo a los emprendedores y suinternacionalización) more efforts are needed to create a suitable ecosystem for entrepreneurs and boost new business and consequently restart thenational growth and recover the economy. Entrepreneurship will eventually be a big part of us becoming once again a great nation and a prosperous economy, but instead of waiting in line for our turn, we are citizens need to take full advantage of the new business opportunities.
We are some of the most passionate people on the planet. You only have to look at Spain’s ability to organise and execute protests in big numbers to see just how much we care about our future. We are engulfed by our pride. We are proud of our culture and who we are so why do we become defeatist when we no longer have someone to feed us.
Why are we not more independent thinkers? Why do we not take care of ourselves? We do we not take responsibility and ownership of our own future?
“There is only one success- to be able to spend your life in your own way”