Mentality and fear of failure, the main obstacles for those who want to start a business in Romania

Mentality and fear of failure, the main obstacles for those who want to start a business in Romania

Mentality and fear of failure rank first among the top obstacles for those who want to start and develop a business in Romania, according to the Startup Barometer in Romania by EY Romania, Impact Hub Bucharest and Startarium.

Poor education, fiscal unpredictability and the current political situation are ranked second, being felt and mentioned by 12% of the surveyed entrepreneurs.

Compared with the previous edition, there is an improvement in perceptions about education and access to finance, which does not mean that these issues have been resolved or improved at national level. Even more so as Romania is last place among EU countries in the latest PISA assessment concerning the share of higher education graduates.

The third edition of the Start-up Barometer in Romania analyzes the responses of 284 entrepreneurs on access to finance, regulatory and taxation, education and training, entrepreneurial culture and coordinated support.  82% of the total number of respondents run businesses less than three years old and 92% said they are founders / shareholders in the company. Most startups are located in the urban area and are active in IT & C, retail, business services, media and advertising, food industry, education and more.

65% are aged between 22-35 years, 28% between 35-50 years, 4% under 21, and 3% over 50 years. The questionnaire was applied between January 15 and February 17, 2019.

In 2019, 74% of respondents believe that entrepreneurship is not supported by Romanian society and that the main obstacle is the fear of failure, compared to 60% in the 2017 edition.

In their business development, the main obstacles facing most startup entrepreneurs are the lack of investment capital (45%), the limited promotion budget (38%), but also the need for new clients to whom they do not know how to respond. %).

Other study results:

The average monthly average personal income dropped to 917 euros.

Faced with previous barometer editions, there is a drop in the personal income of startup entrepreneurs. If in 2017, the monthly average of start-up revenues was slightly over 1,000 euros, in 2019 it fell to 917 euros. The percentage of those whose monthly earnings are below EUR 500 is up from 2017 by 15 percentage points.

Over 9 hours / day dedicated to the business

A start-up entrepreneur devotes an average of 9.2 hours to his business every day, which means that he works 15% more than a full-time employee in Romania.

Own funds remain the main source of funding for 79% of the start-up leaders.

The study's results also show a significant increase in the share of state funding, family and friendship, and business angels, compared to the 2017 edition.

71% of entrepreneurs believe that the funds provided by the Romanian state in the SME-specific programs represent the form of financing with the greatest impact in supporting business initiatives.

This is demonstrated by the two editions of the Start-up Nation program, which had thousands of young applicants. European funds represent a second important source of funding, say 58% of respondents. The importance of bank loans increased, compared with the 2017 edition, third place, followed by business angels - the fourth long-term funding source with 27% of the options.

The fiscal and regulatory environment in Romania has deteriorated over the last year for entrepreneurs, 52% of respondents said.

The main three measures that could improve this environment, according to entrepreneurs, aim at lowering labor taxes, fighting bureaucracy and maintaining fiscal and regulatory environment stability.

50% of start-up entrepreneurs are planning to launch their businesses in new geographic markets.

The most prominent area of ​​enlargement is the regional one, Europe, with 51% of the answers, followed by the American market (17%). And most of the financial resources are for promotion.

Elon Musk, an entrepreneur, CEO Tesla Motors, is the most inspirational foreign entrepreneur. Second place is Jeff Bezos - American contractor, founder and CEO of Amazon; followed by Steve Jobs (Apple) and Bill Gates (Microsoft).
Among the Romanian entrepreneurs, Cristian Onetiu, co-founder of Life Care, is the most mentioned, in the same way as Marius Ghenea - serial and business angel entrepreneur. There is a major change in entrepreneur options over two years ago, the number of those who say they have no model increased from 6% to 24%, and those who have as a model a Romanian entrepreneur reached 21% in 2019, compared to 14% in 2017.

Mentoring and discussions with other entrepreneurs are the main source of learning mentioned by start-up entrepreneurs (41%). And for 52%, the most used sources of interaction and inspiration are online communities.

"The third edition of the Startup Barometer gives us solid evidence that we are still confronted with mental-minded obstacles and that the ecosystem is progressing harder because entrepreneurs at the beginning of the road are afraid of failure. Our efforts to provide entrepreneurs with all the resources they need to grow are duplicated by the need to build a culture of accepting failure as a lesson and fear as a stimulus. If we see the exposure of new ideas and their prototype as proof of courage, the repeated attempt that perseverance and risk taking as a way forward, we think we will make a positive change of impact and not just in the entrepreneurial environment, " said Oana Craioveanu, CEO and co-founder of Impact Hub Bucharest.

"Romania has a fantastic chance to develop an essential competitive advantage, that of innovation culture, especially in technology. And the expectations are great for the new generation, but also for the government, to support this extremely positive trend, "says Cristian Carstoiu, Partner, Business Assistance Department, EY Romania.