There is life after business failure by European SME week on 05-Oct-2011

E very year, thousands of existing small businesses close down as their owners retire or seek new challenges, but cannot find anyone to take over the firm. European SME week (3 to 9 October 2011) aims to remind aspiring entrepreneurs that starting a new company, is not the only option when it comes to taking on the business world.

This year, the European SME week is focusing on Second Time Entrepreneurs and Transfer of Businesses. Research has found that businesses set up by second-time starters actually grow faster in terms of turnover and staff, than those set up by first-time entrepreneurs. A combination of being able to learn from past mistakes, as well as bringing a useful combination of experience and contacts to the table, can see second timers excel beyond their first time peers. This year’s campaign looks to encourage entrepreneurs to start again if their business fails.

Figures show that only 50% of businesses survive the first 5 years after they are created. Yet, many well-established companies only exist because their founders did not give up after failing at the first hurdle. The creation of new companies and destruction of (to a larger or lesser degree) established companies is part of the entrepreneurial process and a dynamic economy. Social and technological progress and inventions that have made us all so much better off haven’t come up by avoiding mistakes, but rather by learning from them.

Of all business closures in Europe, bankruptcies represent only 15% and even though 96% of bankruptcies are non-fraudulent, public opinion makes a strong link between business failure and fraud. The social and business stigma faced by a formerly bankrupt entrepreneur is such that many are deterred from initiating and starting a new venture.

Europe is currently losing approximately 150,000 companies which relates to a massive 600,000 jobs a year, as a result of inefficiencies in the business transfers system. The European Commission’s aim is to make it easier to transfer businesses and develop more effective support services for this process.

As part of the European SME week, the EC has produced a supporting brochure featuring 32 entrepreneurs across the EU whose stories will act to inspire all aspirational entrepreneurs considering a career in business (see link below).

Amongst them, 3 European entrepreneurs, Anna Rizzo, Volker Geyer and Tuomas Pahlman, who all seized an opportunity off the beaten path, were selected to showcase how a business failure can be turned into a success.

Anna Rizzo lives in Rome, Italy. She took over her father’s metal work company when he died in 2000. She has since succeeded in increasing the company’s presence on the international market and has invested considerably in innovation. She is now working on promoting the rights of local SMEs.

Volker Geyer lives in Wiesbaden, Germany. He launched a painting business in the mid-1990s which led to a very difficult bankruptcy. In 2005, he transformed his career by developing a new business plan and marketing strategy for a specialist wall design and decorating company, Aperto, focusing on quality rather than quantity. As a result, Aperto is now a market leader in its sector and has grown steadily. Volker now organises seminars on web marketing and is regularly invited to speak at conferences on this subject.

Tuomas Pahlman lives in Tampere, Finland. He was 21 when his father passed away, leaving him at the head of a struggling company, TTS-Ciptec. He discovered that its cleaning analysis technology could revive the company’s fortunes so he took out a bank loan and offered favourable rates to customers. In the last four years, TTS-Ciptec has since expanded from having one worker to an international team of 16, active across a number of different countries.

Their inspirational stories are captured in a short video:

If you would like more information, you can download the brochere here (PDF)

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