You are not French. This should be pretty self-explanatory, but let me drive it home. Only French people have a large enough network of other French people to get the advice they need when running a company in a timely manner, and the cultural heritage to understand how to interpret the advice they are being given. When someone in France says something like: "Why do you want to start up a company in the first place?" - what they really mean is - "That's the worst idea for a company I've ever heard of and if I were you I would keep your day job." If they say, "I think I know someone who can help you out," what they really mean is, "This is a cool project, and that someone is me." Or the real important double entente: "I'll help you for free, it won't cost you anything." really means - "How do I get on board and what part of it are you willing to share with me for me to help you?" It may seem counter-intuitive, but if you don't offer the guy 10% of your company, at least, he'll say he'll get back to you after a few phone calls and you'll never hear back again. The French don't start up companies to make money, they start up companies to change the world, and of course everyone knows in France is that that is how you make money. There are some weird rules they all seem to follow:
1) If someone asks you for help but doesn't offer something in return - politely say you will help but then don't do it.
2) If someone asks for your help and says they are willing to pay you, wait until they say how much before agreeing. This is really important because if you ask them to give a price they won't know how to do it. It's so rare that anyone in France actually starts up a company that it's probably a novel situation for them.
3) Criticism is important for the success of a projet. The more you criticize the more you feel like it's a good idea.
My French wife was looking for information on how to help a person start up a company in the South of France and she was immediately given a spontaneous offer from one of her friends who had quite a bit of experience in the matter: "I can really help you. Let me give you this list I've been compiling of all the people you should definitely not go and see for help." I thought it was hilarious, and my wife did laugh, but she thought it was incredibly useful information.
You are not French. I rest my case.
Friday, June 13, 2014
Sunday, February 23, 2014
Reason Number 2: The Banks Are Not Partners
There's an argument to be made that my last company in France was the victim of the bank crisis in the USA... that famous one due to speculation in the housing market. The ripple effect of that crisis, and the loss of revenue we suffered were too much to overcome. The French banks were not the bad guys in that story, in fact they were the good students on the international global protecting-the-money-of-the-successful scale. But for my little company, they were the one to give us the "coup de grace". At the first sign trouble, they immediately withdrew our line of credit, pushing us into that penalty zone where suddenly checks are being refused and you are buying tax stamps at the post office to pay the fines.
That's right. If you overdraft your account in France you have to buy a special government issue stamp to get the thing cleared up, or you risk prison time for check fraud. It is the French equivalent of the scarlet letter, and the shame you feel while waiting in line is supposed to teach you never to write a bad check again. It is a great country with a medieval heritage that takes running companies very seriously. Remember, they invented the guillotine, considering it a humane improvement over hanging, firing squads, or being burned at the stake.
Banks in France are not your partners. They are simply there to help facilitate the transfer of funds. This is actually the old school definition, before banks were allowed to start using our money to make more money, exploiting their "20 to 1" leverage; a completely unfair advantage. France is an old school country, but they are obliged by French law to offer companies financing "solutions" based on billing history and client credibility, and you can get it, but they will ask you to guarantee every penny personally or forget it. There is a two year minimum requirement of company "history", and an ungodly number of forms to fill out and sign. In the end, they need a living breathing human being in the equation, someone they can draw real blood from, even if they also have governmental guarantees to cover their eventual risk.
You know the expression that the house always wins... in France it is the bank.
I finally understood the advice that successful French entrepreneurs had been giving me about starting up a company in France. They would say, calculate exactly how much you need to make your company work over a three year period: salaries, assets, legal feels, accounting, rent, marketing... everything. Once you have a number that you are certain is all you need, double it. That's how much you need. That is why it is so difficult to start up a company in France. You need more money than you would elsewhere, and it pays to be a pessimist. If you start up a company like you could in the USA, confident that you could garner the funds along the way as you prove your proof of concept and your capacity to build a functional team, then you are doomed. The banks are not your partners, and potential partners in France will not join your adventure without the support of a bank.
The banks in France are not partners, they are at best governmental agencies ready to put you down the minute they feel your company is no longer viable, and their only criteria for judging that is if you are tight on money. They will not follow you over the cliff. As much as I would like to say that they are backward in this respect, I kind of agree with the principle. Banks should not be financing startups. That is speculation money and should be reserved to a separate category of business endeavors. The only real problem is that they do speculate in France, like banks in every country, on "sure things" meaning stock markets, big business, housing market (oops!), etc... In the end, the only thing I can gripe about is that French banks do not take risks on small businesses because they do not know how to manage that risk, even though it would be in the best interest of their nation as a whole to develop the startup sector.
Developing the best interests of the nation is a problem for the nation, not the banks.
The banks in France are old school, and they protect the interests of those who have money in their coffers. They are not your partners... unless you are already wealthy and want to start up a business. In that case, if you put a million euros in an escrow account, they will loan you a million dollars for your start up so that you can declare a tax reduction on the interest.
If you are a poor person with a million dollar idea, you need to go somewhere else or make a rich French friend.
That's right. If you overdraft your account in France you have to buy a special government issue stamp to get the thing cleared up, or you risk prison time for check fraud. It is the French equivalent of the scarlet letter, and the shame you feel while waiting in line is supposed to teach you never to write a bad check again. It is a great country with a medieval heritage that takes running companies very seriously. Remember, they invented the guillotine, considering it a humane improvement over hanging, firing squads, or being burned at the stake.
Banks in France are not your partners. They are simply there to help facilitate the transfer of funds. This is actually the old school definition, before banks were allowed to start using our money to make more money, exploiting their "20 to 1" leverage; a completely unfair advantage. France is an old school country, but they are obliged by French law to offer companies financing "solutions" based on billing history and client credibility, and you can get it, but they will ask you to guarantee every penny personally or forget it. There is a two year minimum requirement of company "history", and an ungodly number of forms to fill out and sign. In the end, they need a living breathing human being in the equation, someone they can draw real blood from, even if they also have governmental guarantees to cover their eventual risk.
You know the expression that the house always wins... in France it is the bank.
I finally understood the advice that successful French entrepreneurs had been giving me about starting up a company in France. They would say, calculate exactly how much you need to make your company work over a three year period: salaries, assets, legal feels, accounting, rent, marketing... everything. Once you have a number that you are certain is all you need, double it. That's how much you need. That is why it is so difficult to start up a company in France. You need more money than you would elsewhere, and it pays to be a pessimist. If you start up a company like you could in the USA, confident that you could garner the funds along the way as you prove your proof of concept and your capacity to build a functional team, then you are doomed. The banks are not your partners, and potential partners in France will not join your adventure without the support of a bank.
The banks in France are not partners, they are at best governmental agencies ready to put you down the minute they feel your company is no longer viable, and their only criteria for judging that is if you are tight on money. They will not follow you over the cliff. As much as I would like to say that they are backward in this respect, I kind of agree with the principle. Banks should not be financing startups. That is speculation money and should be reserved to a separate category of business endeavors. The only real problem is that they do speculate in France, like banks in every country, on "sure things" meaning stock markets, big business, housing market (oops!), etc... In the end, the only thing I can gripe about is that French banks do not take risks on small businesses because they do not know how to manage that risk, even though it would be in the best interest of their nation as a whole to develop the startup sector.
Developing the best interests of the nation is a problem for the nation, not the banks.
The banks in France are old school, and they protect the interests of those who have money in their coffers. They are not your partners... unless you are already wealthy and want to start up a business. In that case, if you put a million euros in an escrow account, they will loan you a million dollars for your start up so that you can declare a tax reduction on the interest.
If you are a poor person with a million dollar idea, you need to go somewhere else or make a rich French friend.
Saturday, February 22, 2014
A Little Break to Simmer Down!
In case any of you are looking the dates of these posts, you might see that five years have past since I wrote Reason Number 1, and having taken advice from my friends who know me to be a "nicer sort of guy", I let the disappoint of closing my last company simmer down before continuing this blog. It took five years for the anger, pain and shame to subside, and now I believe I can share what I've learned with a little more emotional objectivity. I've reread what I wrote back then, and I still surprisingly agree with it, but I love this country too much to just bash it out of disappointment.
I still live in France, but now I work as a writer. I have shares in production service companies outside of France, and though opportunities to build a structure here are always coming up, I can't bring myself to do it. I think it is now time to explain why I'm still taking my own advice and not starting up a company here. It may be that you need to do it for whatever reason, and have no choice. I still think this advice should serve you, if anything to keep you on your guard.
Don't hesitate posting. I'm open for discussion! Remember that this is to help entrepreneurial spirits weigh the pros and cons of creating a company in France before they jump into the shark infested water.
I still live in France, but now I work as a writer. I have shares in production service companies outside of France, and though opportunities to build a structure here are always coming up, I can't bring myself to do it. I think it is now time to explain why I'm still taking my own advice and not starting up a company here. It may be that you need to do it for whatever reason, and have no choice. I still think this advice should serve you, if anything to keep you on your guard.
Don't hesitate posting. I'm open for discussion! Remember that this is to help entrepreneurial spirits weigh the pros and cons of creating a company in France before they jump into the shark infested water.
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