Budapest isn’t the name on the tip of everyone’s tongue when it comes to launching a new business. Instead, the thriving startup scenes of London, Berlin, Stockholm etc are the ones to draw the excited first-time business owner. This is despite Budapest’s fairly good recent record when it comes to nurturing new businesses. Why do Hungary and Budapest get overlooked by fledgling entrepreneurs? Why do the ambitious head overseas rather than making their make on the Hungarian economy? And what can we do to persuade them to stay?
Setting up a new business requires a considerable amount of initial outlay, which can take a while to recoup due to the heavy toll taken by early running costs. If you want your business to be able to weather the storms which will inevitably hit at some point, a degree of expenditure on failsafes and fallbacks is required. Nations like Germany and the UK often offer considerable financial incentives to help new businesses cover their setup costs and to help them through the first few tricky months. In the past, Hungary has been unable to offer competitive incentives on this scale. This is now changing – the climate for business in Hungary is growing increasingly favourable, and the government is in a position to offer both refundable and non-refundable incentives to both investors and new business owners. However, word about this has yet to get out. Many are unaware of the new, cost-covering, business-friendly economic climate within Hungary, so still seek to ease their startups into existence overseas. What is needed is for Hungary to publicise its new, business-based economic outlook far more widely than is currently the case, in order to entice Budapest startups into existence.
Unfortunately, Hungarian business has something of a reputation internationally for corruption. Entrepreneurs who want to run their business by the book, without having to factor backhanders and so on into their overheads calculations, are more likely to take their businesses to more straight-laced nations, where corruption is at least perceived to be less endemic than it is within Hungary. The reputation of the current and past governments for scandal and financial dodgy dealings does not endear Budapest to those who wish to set up their own business without the shadow of dubious governmental practices hanging over them. International entrepreneurs in particular are, in a word, scared of trying to navigate what they see as Hungary’s unspoken system of corruption. Whether or not Hungary is now as corrupt as it has been within the past is something of a moot point – certainly the nation has expressed its commitment to change. However, reputation counts for a lot in the world of business. If Hungary and Budapest wish to attract new ventures, they need to clean up their corrupt image.
However, while Budapest’s startup scene may be lagging a little behind that of its European neighbours, things are beginning to improve. Initiatives from the private and the public sector have been enticing new Hungarian businesses into the Budapest arena, and the movement seems to be gathering momentum. Companies like Prezi have blazed a trail for those who wish to base their business in Budapest, and more and more startups are following their example. And, by and large, they’re glad of the choice that they’ve made. Budapest is ideally situated, geographically speaking, for communication and trade with the world’s biggest hitters across several continents. Logistics businesses in particular enjoy taking advantage of the 250 million potential customers living within 1000km of Hungary. Improvements in Hungarian infrastructure are helping new businesses to take advantage of the potentially enormous customer base which can be reached with ease from businesses centred in Budapest. Hungary’s corporate tax rate is attractively low, and the government (as mentioned) is doing all it can to encourage new business investment in the nation. Furthermore, the startup culture in Budapest is enticingly vibrant, with a real spirit of positivity and optimism. If Budapest can only shake its minor image issues (which should surely happen when word gets out about the favourable business conditions prevailing here!), we could be about to see the startup economy really flourishing within our city – which can only benefit all of us!