Starting a business in Spain: from worse to worse

| Tuesday, July 13, 2010

I know the expression is ‘from bad to worse’ but if the health of an economy is measured by the health of the number of start-ups that survive the first few months—and by a healthy attitude towards new business and entrepreneurs—it appears Spain is going from worse to worse.

Not only is it more difficult to do business in Spain than in 61 other countries in the world—we’re behind Kuwait, Mongolia and Vanuata on the World Bank’s list—but those brave souls who do try to do it have an ever harder time making a go out of it.

I’ve now discovered the latest GEM (Global Entrepreneurship Monitor) report for Spain in 2009, which gives us all sorts of information on the state of new business creation in this country.

Spain is not doing well.

Very briefly (the complete report is 184 pages long. Does anyone have enough time to read these things properly?), here are some key points that I thought were interesting:

• New business activity has dropped 27.1% between 2008 and 2008, compared with an 8% fall in the previous year;
• Business abandonment has increased 53.8%, with 70% of abandoned businesses closed for good;
• An almost 50% reduction in new companies dedicated to B2B operations;
• Initial investment size has dropped to 30,000€ (from 50.000€ the previous year).

But the worst point in the report for me is a commentary which confirms what an American and a Russian friend (both investors and businessmen) whilst talking about all of this:

“The percentage of people who know an entrepreneur, the percentage of people with a competitive spirit, those who value entrepreneurship as a good career option, those who believe that successful entrepreneurs achieve social recognition and the percentage of people who think the media are doing a good job of reporting on entrepreneurship have all fallen.”

If we don’t start valuing these activities more in society, how do we think we are going to dig ourselves out of recession one day?