Recession heralds return of 'low-cost start-up'[de] 

Peter Jungen, co-president of the SME Union, said some of the world's biggest brand names were launched during recessions, but stressed that Europe must stop stigmatising failure if it wants to compete with the American entrepreneurial spirit. 

"This is the return of the low-cost start-up. You can attract staff you would not have gotten last year and for a lower cost – this is not good for employees but it’s good for entrepreneurs. Also, you can rent office space cheaper than in the past, and server costs are down," he said. 

Speaking at a BusinessEurope event to mark SME Week, Jungen said successful new companies can emerge from this period of economic recession thanks to the opportunities presented by the downturn. 

"Successful companies can come out of this because of the crisis, not in spite of the crisis. This might be a chance of a lifetime," he said. 

Jungen's view was echoed by Karen Wilson, senior fellow at the Kauffman Foundation. She said millions of unemployed people now have the opportunity to launch business ventures. In addition, she said laid-off workers who received redundancy packages might be less reliant on credit from the risk-averse banking sector. 

"Times of economic crisis are a good time to start something new. Opportunity costs are lower. A lot of great companies were started during downturns," Wilson said. 

Martin Ohneberg, president of YES, the European Confederation of Young Entrepreneurs, said Europe needs to change its mindset to compete with the US if it is to create an environment where risk-takers are viewed as heroes. This, he said, meant accepting that failure is a part of being an entrepreneur. 

"In Europe, if you're a failure and you go bankrupt, it's seen as something criminal. In the US, most entrepreneurs have been bankrupt at some point in their career. Entrepreneurs should get a second chance instead of being painted as the bad guy on the front of the newspaper." 

"We have to change our mentality in comparison to the US. People in Europe are not willing to take risks. You have to start in primary schools, showing that it's interesting to be an entrepreneur," Ohneberg said. 

John Vassallo, vice-president for EU affairs at Microsoft, said new inventions and start-ups will help get Europe out of the crisis. He said Microsoft is working with SMEs and supporting new high-tech companies. He also stressed the importance of new forms of entrepreneurial education. 

Karen Wilson, senior fellow at the Kauffman Foundation, said shaping the attitudes and skills of young people is essential to generating a pro-risk environment. "This means embedding entrepreneurship in education. Entrepreneurship is not just for businesspeople. We need more innovative thinkers in the public sector and in all other fields. We also need to use more interactive methods of pedagogy. It's important to bring entrepreneurs into the classroom and to train the trainers." 

Wilson added that most universities in Europe are public institutions and that instituting change in this sector can be slow. Universities should be given more autonomy, she said. 

Peter Jungen, co-president of the SME Union, said Europe needs six million new entrepreneurs to emerge from the crisis, or "we'll come out of the crisis weaker than we were going in". 

"Educating young people is the key. You can't change people who are 50 or 60. In the US they say entrepreneurs are heroes. We have to cherish success like they do," he said. 

Jungen was fiercely critical of governments' response to the financial crisis, saying bailouts for flagging industries will simply preserve old structures. "Innovation is the only way out," he said. 

Arndt Kirchhoff, who chairs BusinessEurope's entrepreneurship and SME committee, forecast more than five million job losses in the EU this year. He said SMEs have been the most dynamic job creators in the past five years, stressing that the sector is crucial to how Europe weathers the economic storm. 

"Unfortunately, some SMEs feel government action is aimed at banks and big companies, but €30 billion has been earmarked for SMEs by the European Investment Bank between now and 2011," Kirchhoff said. He also pointed to the Late Payments Directive, the temporary easing of state aid rules, and the application of the 'Think Small First' principle as having the potential to improve the entrepreneurial environment. 

Patrice Liauzu, Brussels representative of the European Investment Bank, said the EIB has been asked to do more and to do it better. The bank is also targeting its funds towards unemployed people who want to set up microenterprises. 

“The remaining challenge is to make sure that banks make use of this line of credit,” he said.