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France: When Bureaucracy Kills Entrepreneurship

Bureaucracy in France!

Bureaucracy in France

France: Before you even start to read this post, keep in mind that it is not French Bashing. I am a Frenchman living in France and working, like many others do, to grow entrepreneurship in this country. So, yes, there is a lot going on in France, as much as in any other country, but we shouldn’t take “French Bashing” as an excuse not to dig deeper in what is working and what isn’t.
It is important to set some basic rules and I hope this one will help your interpretation of this post. I take my precautions because the French can be rather blunt and forceful when it comes to analyzing what is happening in their country.

My recent posts have caught the attention of a growing audience, and LinkedIn now publish them. I am forever grateful for your participation. I hope my thoughts help spark ideas in your mind and contribute to a debate. It is with that state of mind that I am writing today on the status of “Student Entrepreneur”, only recently created by the Higher Education Minister, Geneviève Fioraso (pictured above).

I picked up an article published in Le Monde on October 10, 2014. It says notably that:

Unemployment with the under 25 age group is 23%.
Students are in the best possible position to become entrepreneurs.
Only 3% of companies are created by students, compared to 11% in the US.
37% of students would consider entrepreneurship, but few act on it because mostly they don’t have the financial support for the first 12-24 months.
Then there is something that I pay more attention to and you’ll understand why I chose this post’s title. France is (in)famous for its fiscal complexity. In fact, complexity in an understatement! Whether it is the status of student-entrepreneur or self-employed (“Auto-entrepreneur”), you must pay taxes before you even start pocketing any revenues!

€3,500. You’ve not even sold a product or service; you’re already paying taxes!

In the UK, looking at the most recent figures, as a self-employed, you’ll pay national insurance when your annual profits reach £5,965. Then you’ll start paying £2.80 a week.

Anyway, I don’t aim to make comparison between France and the UK. The systems are too different; but I wanted to mention a simple example to underline the difference of mindset. In one country, you just get on with it and you’ll start paying when you generate profits; in the other, you start paying regardless.

I’m leading you towards bureaucratic non-sense. France has its share of it!

I looked into the status of student-entrepreneur on the very official website of the Ministere de l’Education Nationale. Here’s what it says:

The status is limited to the under 28.
You must have your “baccalauréat” or equivalent.
You must pay an annual €500 registration fee.
You must have a project and go through a selection process.
There’s a reason why it is what it is. Well 3 reasons:

You’ll integrate some sort of incubation program.
You won’t pay double taxes -i.e. student social security + independent social security called RSI in France (the €3,500).
You will obtain a diploma!
Some of you might feel strongly about the fact that this is better than nothing. I disagree. The very principle of encouraging entrepreneurship on campuses is commendable; no doubt. But why the need to complicate it so much?

The fear of risk and failure is already sufficiently deeply rooted in French mentalities, we don’t need to make it even worse.

In a 2013 survey, Ernst&Young reported that among G20 economies, France is second-last in terms of Entrepreneurial Culture. This article published by Chefdenteprise.com on August 30, 2013 says “only 2 French entrepreneurs in 10 think that the country’s culture encourages entrepreneurship (the G20 average is 57%). It also says that the main reason for this anti-risk taking culture is entrepreneurial failure is being stigmatized.

To go back to my original point, why would you make it so bureaucratically complicated when you know the country’s mentalities are already against risk taking which is what entrepreneurship partly is about?

France always does what it does; it creates corridors. This is “Mother-State” at its worse. You must fit in a category or you’re not admitted. And once again, this is taking place at School!

Yesterday I read an article in the Psychologies magazine by Ilona Boniwell, Positron’s Director. She is an expert in Positive Psychology. In this article titled “The French Paradox”, she refers to the French educational system. Ilona is a Latvian who grew up in Siberia, Algeria and the UK. She moved to France 5 years ago. She talks about one of her sons, aged 13 at the time, who she describes as an incurable optimist; even annoyingly optimist and confident. 5 years ago, he would say: “Oral test? What’s the problem with that?”; today he says: “I’m useless; especially with oral tests”.

She argues that the French School produces unhappiness. 75% of French students are afraid of test results. Their happiness drop as soon as they get into 7th grade; moving from primary school to “le collège”.

Education in France has been under the spotlight for all sorts of the wrong reasons for a rather long time. As a father of two boys still in primary school, I am puzzled by what is happening. I am worried about what the Minister, Najat Vallaud-Belkacem, is cooking. I am worried about what my eldest will find in 2016 when he enters le collège.

With that in mind, I do what most parents would do, I mentor my sons. I teach them right from wrong. I teach them tolerance. I open their eyes to what is happening in the world. I tell them about my entrepreneurial endeavors with people all over the world. I tell them to be the best they can be and not to fit in narrow-minded systems if it’s not what they feel like. I teach them to be their own.

I hope my sons will become entrepreneurs in future. I hope that some day, in their teenage years, my sons will speak to me of an idea they have. I hope that they won’t get stuck on the idea of getting diplomas for the sake of it. I hope they can recognize the entrepreneurial vibe if it ever shows and they act on it, whether they’re 16, 20 or 25.

I don’t see the point of entering narrow-minded systems such as the Student Entrepreneur one. This is creating unnecessary bureaucracy to produce a model of entrepreneur à la française.

It would make more and better sense to me personally if the Government spent their energy and our money on opening campus hubs where students, entrepreneurs and investors just hook up. A 100% open-ended environment.

Clearly, there is a mutual interest from all involved parties to produce more entrepreneurs; but what game is the Government playing exactly?

If you spend some time digging you will find that there is a huge and growing entrepreneur support community in France. Just take a look at this list; these are the partners of the Ministry of Education’s plan. What does this tell you? There’s a lot of people already involved in inspiring, guiding, mentoring, and incubating students into entrepreneurship.

Add to this the myriad of other incubation centers, mentoring programmes, business angels networks, etc. and you’ll notice that the support infrastructure is already in place.

Why is the Government not spending tax payer money on raising awareness among the student community; just to break all barriers? Why create more barriers with a limiting programme?

You simply don’t create a true entrepreneurial movement when you make it elitist in the first place. This status is a reflection of why Education is suffering. We invent restrictive models and we expect people to fit in.

The Ministry of Education even launched a tender process for “educators” to appear on the list of partners! How restrictive is this?

Entrepreneurship, especially if we’re aiming to grow innovators, is about creativity. It’s not about imagining and enforcing a model of the “Perfect French Entrepreneur”. I would expect any private initiative to be selective and even paying. I would expect Government to raise awareness and create opportunity by funding students into entrepreneurship, not to try and play the role of professionals. Because, let’s be clear, the Education Nationale is not properly set up to build entrepreneurs.

It would make more sense to me that this initiative be focused on educating students on entrepreneurship; not to deliver a diploma but to detect entrepreneurs. Then it would make sense to:

Sponsor financially those who are ready to act on it as they feed into incubation programmes; and
Continue educating those who struggle with the idea.
Les Echos published an article today. It rightly states that the status of Student-entrepreneur provides a framework and legal legitimacy to those who want to start a business, but it’s not enough. I’m glad to see that I’m not alone to think that way. Even a higher education school, Audencia in Nantes, is saying so.

Students don’t need legal legitimacy to become entrepreneurs. They don’t need bureaucratic systems to justify whether they are eligible to tax relief. They need an infrastructure, led by professionals of all sorts, where they can overcome their fears, look entrepreneurship in the eyes, find inspiration, be creative, build a viable project, meet mentors, pitch their idea, found teams, build prototypes, and source funding.

Whoever they are!
Now I understand why the scheme is what it is. The Government is aiming to produce 20,000 student-led startups over 4 years as a solution to grow the Economy. It is a tangible objective and it can be measured. But we know what will happen in 2017, when it is election time!

Let’s be pragmatic here. There are 1m auto-entrepreneurs in France. Have they contributed to GDP growth since 2009? No. Have a look at this article for figures.

Here’s another article from 2013 which shows that nothing has changed in 2 years: http://www.lemonde.fr/economie/article/2013/05/29/auto-entreprise-un-bilan-mitige-pour-un-statut-conteste_3419257_3234.html

We have to expect this student-entrepreneur status to produce similar results.

For some time now, we have been critical of politicians and successive governments for falling short of true reforms. All we get is firefighting. We know how inefficient firefighting is in private sector companies; do Governments believe they’re different?

I guess that my ultimate point is, once again, about ambition.

Are we only interested in producing a few thousands entrepreneurs because election time is short of 2 years? Or do we really mean to create generations of entrepreneurs and rid the country of its rigid mentality towards risk, failure and business?

This is why I am disappointed by this rigid Student Entrepreneur status and scheme. It forgets too many people. It deals with the wrong problems. It’s short-sighted. It will create nothing but a waste of public money, yet again.

I’d like to hear something else from the Government. A truly ambitious entrepreneurial plan like this:

Open a hub in each and every university and leave it open to students, entrepreneurs, investors and educators to get organised. Put real money to support the actors of the community.
Make it 24/7 so French entrepreneurs get out of the country’s borders and can work remotely with an international community if they want to.
Make available a 2-year envelope to every student willing to start a venture. Maybe they’ll fail but there’ll be a community to support them.
Forget taxing and bureaucracy! The priority is to get them to focus on building their venture. When they’re up and running and successful, they’ll pay taxes!
This is more ambitious. If we want to deal with fear and risk; let’s stop focusing on diplomas. If we want to nurture success; let’s not focus on taxes and bureaucracy. Let’s make a scheme that is truly entrepreneurial.

As always, I’d like to hear your thoughts on the subject.

Thx!

Article: By Seb Robin

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