Hungarians are enterprising

Every sixth or seventh Hungarian is a businessman. That is, he has registered himself as the owner of a company. The number of businesses grows but, alas, so does the number of bankruptcies. In the first half of this year there were almost 30% more bankruptcy proceedings than during the same period last year. We are talking about 9,390 such cases. Most of them end without the slightest hope of survival. Yet the number of newly registered businesses has grown again by more than 10,000. Right now there are 1.2 million businesses in Hungary. According to experts, only 200,000 would be warranted given the size of the country. For comparison, in Austria there are 340,000 small businesses.

Some of these so-called enterprises are the results of pressures of circumstances. For example, the "enterpreneur" lost his job and had a little money to invest. So, he tries his luck as a businessmen. Most of them work in the building industry or open a small shop. The competition is fierce, and there is also a black market competing with the registered businesses. No wonder that the number of bankruptcies is so high. However, it seems that bankruptcy doesn’t discourage people. Out of 19,000 new business owners 17,500 already went bankrupt at least once.

Starting a business is always a high risk proposition. The Small Business Association claims that only two-thirds of small business startups in the United States survive the first two years and that less than half make it to four years. Very few, however, declare bankruptcy. Perhaps the difference between American and Hungarian business bankruptcies is the level of startup capital, perhaps a difference in bankruptcy laws.

Whatever the case, the fact remains that there are too many very small businesses competing for a fraction of the Hungarian public’s disposable income. I assume that eventually the situation will change. According to György Vámos, secretary of the Association of Merchants, a certain movement toward larger business units is already noticeable. Let us hope so, because this is certainly not a healthy situation.