While America and Western Europe may share a lot of things in common, when it comes to business there are a couple of differences that set the two apart. Both continents share a long, strong history of trade, scientific/technological innovation and cooperative efforts in global issues which have helped shaped the way we live and do business in the modern world but despite this, entrepreneurs coming from one of these regions may find it tricky to business in the other. Both American style and European style businesses have their own strengths and weaknesses but the cost and benefits of opening and running a business in either of the two depends on the preferences of the owners themselves. Here are some facts that you should know about what makes two of the world’s most powerful economies different when it comes to business.
One of the biggest concerns that come to mind prior to starting a business is, of course, the cost. Aside from saving up enough capital to launch your business, business owners and entrepreneurs have to factor in all the expenses that come with running a business such as rent, utility, maintenance expenses, salary expenses and health insurance. While businesses in both regions do pay for all of these expenses, when it comes to saving money European businesses have a slight advantage over their American counterparts. The reason comes down to two areas of interest which are healthcare expenses and legal fees. European entrepreneurs don’t have to worry much about providing affordable healthcare to their employees because most countries in Europe have state-sponsored or supported health care systems for their citizens. American businesses, however, do not have that luxury and considering how expensive health care coverage can be American businesses especially small businesses could spend up to 18% more on healthcare than corporations do. American businesses also outspend European businesses when it comes to legal fees as European lawyers typically are less expensive and European laws themselves generally more strict and less vague so less time and money is spent while in America entrepreneurs spend more time trying to maneuver through tricky legal situations as a result of lax, less-defined laws.
Europeans, however, do have a disadvantage when it comes to business development. European laws are said to be more formal and restrictive than American laws which is why businesses in Europe may have a much tougher time developing due to having more regulations being placed regards to the qualifications of a business. In America, for example, anyone interested in opening a business in their own garage is more than free to do so while in Europe it is “technically” not legal to do so. American regulation laws are usually more lax and open to supporting creativity allowing entrepreneurs to expand their business without letting over regulation slow get in the way of the success of their business. European businesses are more focused on protecting the rights of employees as they have more laws that give European workers the right to have more rights and mandates that protect them when a company falls under circumstances beyond their control. It provides the perfect safety net for entrepreneurs at the cost of having the freedom to expand your business while American businesses give more opportunity for growth while providing less protection against job losses.
One thing that remains true for all small businesses regardless of their country of origin is the importance of raising capital to help their businesses transition through the developmental stages. When it comes to startups, entrepreneurs can face challenges in raising enough money to do this if they do not have the right kind of support to help them in the early stages of the development of their small startups. Startup owners in Europe have the advantage of being arm’s reach away from such support as there is a strong network of early-stage funders available to help entrepreneurs launch their businesses, most of which exist in Europe’s key capital cities such as London, Berlin, and Amsterdam. European businesses, however, lack a strong presence of growth stage funders that would enable the startups to flourish after they’ve passed the early development phase which is why some of them after, reaching a certain stage of development, move over to America where they have much better access to growth stage funding support. This factor has also affected the way startups grow as in America more focus is placed on market penetration and business ideas as opposed to revenue generation because many startups are funded by venture capitalists. In Europe more focus is placed on the opposite given that there are not many opportunities for growth stage funding, most funding is allocated to making revenue. American startups can be valued in the billions but their revenues may not show it which is why most of them fail while their European counterparts value the success of their businesses in terms of profitability and growth to develop niche markets.
As an entrepreneur when it comes to deciding where you may want to open your small business or startup it’s important to know what you’re looking for in the environment you may want to build your business on before you decide to start or move one. While both regions have their own strengths and weaknesses the success of your business must be determined by what you place more value more on whether it is on growth, revenue, developing a niche market or other reasons. The more research you do the more you will learn about the what opportunities exist for your business or startup in the world.