Business in France

I got into a conversation with a friend while I was in France. We were planning our next day’s activities and without any strong plans, I thought we should put up a lemonade stand out in front of the house. He said we couldn’t do that. I found that a bit odd.

That led into a hour-long conversation about business in France and US. The idea of the lemonade stand or the neighborhood kid mowing someone’s lawn is completely foreign. That really made me wonder what was so different.

Here are a couple of things:

  • All businesses need to go through some 20+ step governmental process before you can begin operating.
  • The average person doesn’t have the means of starting their own enterprise. That leaves banks as a main source of capital. Banks show a similar rigor in the approval process as those in the States.
  • There isn’t bankruptcy protection in France. If your business fails, the owner is personally responsible for the debt and will spend the rest of their life repaying it, if need be.

So, its hard to set-up, it is difficult to raise capital, and failure means a lifetime of repayment.

Laws and regulations do make a difference. I think we take for granted the entrepreneurial climate that exists in the U.S.

7 thoughts on “Business in France

  1. Good points. People slam the “rich” in this country, but they are a good source of capital for the people with risky ideas that banks won’t touch.

  2. We Americans need to be more conscious of how lucky we are to live in such an entrepreneurial culture; and how the lack of such a culture is a problem for many other countries. The lemonade stand is an American cliche, but I think your story shows how important something that seems trivial is in the big scheme of things. I’m a budding entrepreneur myself so yes I’ve drunk the cool-aid, but the reality is that entrepreneurship is the perpetual frontier…let’s keep exploring…

  3. It is incorrect to say that there is no bankruptcy in France. Most companies are started under the form of an SARL or SA, depending on the size, where responsibility of the shareholders is limited to their original investment.
    Of course, owners of a bakery or a grocery will most probably have started their company as a privately held entity, which entails full responsibility.

  4. It’s funny, though, that the rate of business failure in France is drastically low. I can’t find it right now, but lower than 20% from memory. And, roughly 20% of France’s businesses become international (mainly European) companies, much higher than American.

  5. However, you are partially right, though, since in France one can choose to start your business as something that would equate to an extension of your household, and *that* is not protected by any Chapter 11-like laws…

  6. dda, you are forgetting that since most of the seed money is coming from the banks, they will deal with you only if you are mortgaging your house, even if you have settled a limited liability form for your company.
    More over, it has certainly a lot to see with culture: in France, the first contact you have with the business world is a one-week internship when you are 16.
    Besides, I guess the more entrepreneurs you see around you, the more you can contemplate becoming one…

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