Financing a Small Juice Business in Hungary
Angie Wichman
Creighton University
For Dr. Gasper
Finance 402
April 30, 2002
1. Executive Summary
The author of this paper investigates the establishment of financing for a juice company in the country of Hungary because of the growing market available in the former soviet states. In addition the author explores the feasibility of successful financing of a small juice business in particular. The research for this paper was found through governmental websites and articles out of peer-reviewed journals.
The paper attempts to provide a framework for understanding how an entrepreneur would obtain funding for a small business in Hungary. It attempts to give the common businessperson a thorough understanding of the sources of financing available. It also serves as a guide to an entrepreneur in the juice business in determining whether or not Hungary would be an opportune environment for financing a new venture.
After the fall of communism in Hungary, industry became privatized and returned control to the public. This shift in control has had a major impact on every aspect of business in Hungary. Before starting a small juice business in Hungary, it is important to understand the true definition of an entrepreneurial business and the conceptual framework that surrounds it. One of the most important aspects of starting a new business is the financing that provides the capital to start the business. Lending in Hungary operates under three different theories, which are very important to understand before seeking a source of financing. A number of different sources of funding are available for an entrepreneur in Hungary, some of which will be explained in detail. The financial system in Hungary is often very hard for an American to understand, so the system used in the United States is compared and contrasted to the system in Hungary. After a clear understanding is achieved about financing in Hungary, the future of juice companies is examined.
It is the opinion of this author that a juice business would not be a worthwhile venture to start in the country of Hungary, because the industry has high barriers to entry. Financing and investment provide the largest barriers stopping an entrepreneur in Hungary.
TABLE OF CONTENTS
- Executive Summary
...2
- Introduction
4
- Definitions and Backgrounds of an entrepreneurial
business
...4
- Conceptual Framework
.5
- Theory of Lending in Hungary
.6
- History of Lending in Hungary in the
1990s
..7
- Available Sources of Funding
.19
- Findings of Sources of Funding for SME in
Hungary
..11
- Status of Juice Companies
..13
- Conclusion
13
- References
15
- Glossary
16
- About the Author
.17
- Appendix A
...18
- Appendix B
...19
- Appendix C
...20
- Appendix D
...21
2. Introduction
The most important thing for a person looking to start a new small business is to understand exactly what it means to start a business and become an entrepreneur. This new role can best be understood by looking at it through a five dimension conceptual framework.[1] One of these dimensions involves looking at the financial assistance available for an entrepreneur in the area being looked at to start the business.
This report is being generated as a small portion of a larger report detailing the entire business environment in the country of Hungary. The genesis of this idea came from a presentation on the high levels of profitability of juice companies in the United States in a business course at Creighton University. Because the United States is already a saturated market, it was the intention of the entrepreneur to expand business into the former Soviet Union believing it to be an untapped market.
For someone starting a juice business in the developing country of Hungary, it is important to understand the economists theories about lending in the country, in order to gain a better understanding of why a person will or will not receive funding. After initially analyzing the different theories it is important to study the history of lending in Hungary since 1990 and the fall of communism.
Examining the history of lending will aid in the understanding of the financial resources available to an entrepreneur in Hungary. The newest development in the financing in Hungary is a proposal for a system of small and medium sized business financing known as the Szechenyi Loan Card.
To further break down what resources are the most profitable, it is important to look at how other companies who have used that form of financing in Hungary are prospering in the current economy.
Once the available financing is laid out, the future of the juice industry should also be scrutinized to determine whether or not it would be a worthwhile venture for a new entrepreneur.
3. Definitions and Backgrounds of an entrepreneurial business
Anyone who has a new business idea and wants to take that idea to start a business can be considered an entrepreneur. The term entrepreneurial environment refers to a combination of factors that play a role in the development of entrepreneurship.[2]* There is not a blanket way to explain what the entrepreneurial environment is going to be at any given point in time because it varies by country, by state, by city, and even by industry.
At the country level, it is important to realize that countries that are more capitalistic and have fewer rules and regulations are more likely to be a better environment for an entrepreneur. Many countries have gone as far as to offer tax incentives and training services to start-up business owners in order to encourage the development of new business.[3] At the city level, larger cities have more forms of financial capital available to help the entrepreneur open the business. At the industry level, some industries are more able to contribute to small business survival and others have such high barriers of entry that it proves almost impossible for a small business to survive. An example of a business that is very conducive to small businesses is the restaurant industry; one that is reserved more for the industry giants includes the electronics industry.[4] One of the reasons why certain industries are easier to start a new small business in has to do, in part, with how established the industry and its standards are. Programs that are already established and have shown the ability to be highly profitable are more appealing for entrepreneurs because there is a higher probability of attracting potential investors.[5] The underlying concept is that entrepreneurship prospers if society views it with a favorable attitude.[6]
Entrepreneurship in recent history has been most heavily encouraged in the economies of Central and Eastern Europe[7] in their transformation from communist economies to economies that are more capitalistic.[8] Hungary is one of the countries that falls into this category of strong encouragement for small entrepreneurial enterprises. However, it is important to note that most of the CEE countries have not developed optimal methods of corporate control or financial system structures for their economies.[9]
4. Conceptual Framework
Two economists, Georgine Fogel and Devi Gnyawali, developed a conceptual framework that can be used to examine the entrepreneurial environment in Hungary.[10] This framework uses five dimensions: (1) financial assistance; (2) non-financial assistance; (3) entrepreneurial and business skills; (4) socioeconomic conditions; and (5) policies and procedures for entrepreneurial activities.[11]
Financial assistance is probably the most important dimension to a new entrepreneur because it is highly unlikely that the entrepreneur would be able to fund an entire startup business without any outside capital. Even if the entrepreneur can cover the initial capital[12] it is likely that the businesss later growth and expansion cannot be fully covered from the pocket of its developer. It is often hard to obtain initial financing because the entrepreneur has no collateral[13] or business experience in that industry.
Non-financial assistance refers to advice they can receive from other people or role models in the industry they are looking at entering. This paper would serve as a good source of non-financial assistance for an entrepreneur who was looking at the possibility of starting a juice business in Hungary.[14]
Entrepreneurial and business skills simply refer to all of the general business knowledge a person wanting to start a business would need to obtain. These skills could be developed by taking classes in business administration at a university or by doing an internship or apprenticeship in a field to see how established business owners operate their businesses.
Socioeconomic conditions revolve around societys view of entrepreneurs. If a certain society does not believe that industries should be run by individuals as opposed to the government, then a small business will not be able to succeed. This is often one of the most difficult factors to overcome in a society moving from communism to capitalism. Under communism, the public expects important industries to be run by the government, not by individuals. Many favor the move toward privatization of industry and capitalism, but it is often a very slow process.
Policies and procedures for entrepreneurial activities can vary from very unregulated to very regulated. Unregulated business may simply be required to report year-end financial status. Regulated business on the other hand may have a high level of procedures associated with registration and licensing, taxes, and reporting requirements.[15] Countries that keep procedural requirements to a minimum generally have a viable and dynamic entrepreneurial sector.[16]
5. Theories of Lending
Lending can be looked at from an empirical perspective or from a theoretical perspective. The empirical perspective focuses solely on the numbers provided from a specific industry. The theoretical perspective analyzes how the economists believe certain financial systems should work in their ideal form.
One of the first theories and most famous theories for financing and capital structure was named the irrelevance theorem. [17] The theories of financing have moved so far beyond this original theory, the ideas contained in it seem almost ludicrous. Irrelevance theory felt that outside influences such as taxes and other regulatory practices have absolutely no effect on the financing of the value of a venture, regardless of its capital structure.[18]
An important factor to look at when considering outside equity financing is whether or not the economy is one of transition.[19] In 1993, McKinnon proposed a theory rationalizing the use of outside equity based financing. He argued that bank intermediation should be reduced during the first phase of the transition to avoid serious misallocation of funds, as a result of moral hazard and adverse selection problems.[20] McKinnon was not trying to say that no outside financing should be sought in a transition economy, but because the government probably still owns the banks, they are probably not the best source for a business attempting to privatize industry.
The latent variable model developed in 1998 by Revoltella made an important discovery that in transitional economies banks tend to discriminate against the smaller firms because the bigger, more profitable industries tend to get rid of their expensive debts.[21] What this means is that the leverage[22] of a company tends to increase the larger and newer the firm is. Foreign owned companies who decide to move part of their business to another country tend to have the most leverage when it comes financial borrowing.
Another theory known as the pecking order theory was developed by Cornelli et. al. to explain financing in transitional countries. This theory suggests that transition countries like those in CEE have higher leverage ranges because of the low cost of filing for bankruptcy and the tax breaks that are granted to entrepreneurs.[23] In many respects, this refers back to the discussion of how conducive the socioeconomic and regulatory factors are in producing a sustainable entrepreneurial environment. Because of these factors, it stands to reason that less profitable firms that turn to banks while the more profitable firms tend to get their financing from other sources.
6. History of Lending in Hungary in the 1990s
It is important to understand the patterns of lending in country in order to have a better idea of where the future of lending will go in that country. According to the study conducted by Fogel, Entrepreneurial development in Hungary has been hindered by lack of preferential treatment, high taxation, and the unavailability of low-cost, long-term financing.
One of the most important things to understand is the type of currency that is used in Hungary. The official currency recognized by the Hungarian government is the forint.[24] Forint Notes are in denominations of 10000, 5000, 2000, 1000, 500, 200, 100, and 50. Coins are in denominations of 200, 100, 50, 20, 10, 5, 2 and 1, and 50, 20 and 10. As of April 26, 2002 there are 286.84 forints per every US dollar.[25]
Just prior to the 1990s in Hungary a two-tier banking system was established. This two-tier system simply means that the banking business was being expanded from just having one main bank to having a main bank with several different branches. When the process began on January 1, 1987, there were 115 branches of 15 banks; when the system was reevaluated in 1997, there were more than 44 banks with more than a thousand different branches. [26] This dramatic change resulted mostly from the privatization of the banking industry after the fall of communism in Hungary.
There is much debate surrounding the issue of whether or not Hungary suffered from a credit crunch[27] in the early 90s. These shifts could have resulted because of the growing number of banks and their reluctance to grant loans to fund the start-up of private industry in direct competition with the government owned companies.[28] However, the privatization of industry may have led to more choosy borrowing because a private company could no longer expect to be bailed out by the banks.[29]
During the period of 1992-1993, output in Hungary began to decline and as a result, the net credit flowing out to entrepreneurs was virtually zero.[30] Because of the lack of funding, many companies began to file for bankruptcy, causing the financial system to become even more cautious in where they loaned their money. Hungarian government was concerned about all of the bankruptcies that were taking place, so they enacted a new bankruptcy law that made it impossible for firms to roll over bad loans.[31]
1993 started to see an increase of net credit flowing into entrepreneurial enterprises from both the domestic and foreign markets.[32] A significant observations [by Csermely] was that enterprises that reduced their exposure to banks in 1992 were able to invest, whereas those whose exposure decreased in 1993-94 did not invest much in those years.[33] This may have something to do with the fact that banks viewed outside equity being sought by the business to be a signal and strong indicator of their creditworthiness, thus extending their credit to those firms.[34] The average small business in Hungary had a debt-to-equity ratio of 33% in 1993.
The operation of credit institutions in Hungary underwent reform in 1993 when rules were created that amended the general reserve provisions to conform to the Organization for Economic Cooperation and Development (OECD) standards.[35] One of the standards that was revised required the capital adequacy ratios[36] to increase, which they did up to a high of 8% in 1993. This policy led to the absorption of the equity of most of the banking sector, forcing industry to once again seek financial assistance from foreign investors. Domestic banks continued to lose market share because of their higher financing costs caused by high-risk premiums on forint[37] investments, high reserve requirements, and because of their rating in the international financial market.[38]
The total privatization of the banking system in Hungary began in 1994 and continued to be shaped by important governmental regulations. An important development in financing came about in 1995 with the adoption of the Act on Foreign Exchange, which contains the provision governing convertibility at a level required by the OECD and the International Monetary Fund (IMF).[39] This law helped to widen the scope of capital account transactions that dont require a license. In the past, any transaction that was for the establishment of business required the purchase of a license to ensure that only qualified, government businesses could be started within the country. This made it easier for businesses to secure loans from domestic banks because one of the most hindering regulations governing business had been reduced.
The government of Hungary forced a number of smaller banks that had a history of losing money to merge with the larger more successful banks in order to speed along the process of privatization and to stop the trend of borrowing from foreign banks.[40] By the end of 1996, the extent of foreign banking industry that had control of a domestic bank had grown to more than 85%.[41] So, in other words, the governments actions were not successful.
Growth in 1996 was associated with the trend of Hungarian firms borrowing from foreign investors. In most cases these foreign investments were not from banks, but instead from venture capitalists, business angels, or most commonly family and friends. The average firm in Hungary had a debt-to-equity ratio of 42% in 1996, a sharp increase from the 33% that was observed in 1993.[42] More than a third of the firms had no bank debt at all, and only a tenth had bank debt-to-total liabilities ratio higher than 30 percent. In 1996, bank debt stood at three percent of total liabilities in the median company.[43] These numbers show the growing strength the banks are growing in the financial economy of Hungary and the level of use by domestic corporations.
On January 1, 1997, Act CXII on Credit and Institutes and Financial Enterprises came into effect in Hungary. What this Act did was divide financial service companies into two basic groups: (1) credit institutions such as banks, specialized credit institutions, and cooperative institutions; and (2) financial enterprises.[44] This has made the requirements for the individual institutions much stricter in the way they have to go about reporting such things as capital and what forms of licenses and registration they are required to perform.
In 1997, the influence of the foreign firms began to dwindle and the domestic financial institutions began to reestablish their position as the leader of lending in Hungary. This shift was probably due to the near completion (approximately three fourths of the banking sector) of the privatization of Hungary by the end of 1997.[45]
7. Available Sources of Financing
Available sources of financing can be divided up into six different forms of financing. This section will attempt to give a brief description of each form.
Subsidized Credits
The majority of the financing provided by banks in Hungary falls into the category of subsidized credits.[46] Subsidized schemes are very advantageous to the entrepreneur because they have low interest rates. It is believed that the use of interest rates help ensure that investors find their desired target group.[47] The target market for subsidized loans is businesses that are in trouble or are in a struggling industry. These loans are subsidized by various venture capitalists investing money in a firm and then acquiring partial control of the governing of that business. This system provides cheap funds to the entrepreneur because the interest rate was the same average as other interest rates and at certain times it was even lower than the prime rate of the National Bank of Hungary.[48] An important factor that must be understood with this system is that no interest is charged on the loan any interest income is generated from interest drawn while the money is in the bank.[49] The main drawback of a subsidized loan is that, because the entrepreneur must have a continuous flow of investment coming in, the funding is never completed, i.e it is like a Panzi Scheme.
Sustainable Approach
The other major form of lending is the sustainable approach, which is simply an extension of the money market. Sustainable programs do not require on-going financing, since the interest income [to the lender] covers the operating expenses and losses (if the program management is adequate).[50] The probability of bringing in additional funds is higher with the sustainable program because the invested funds can be increased.
Staged Loans
Staged loans increase the amount that can be borrowed after every successful payment made to the bank.[51] An entrepreneur would only be able to see the maximum lending amount at the end of the process, usually five to seven months, under this system as a reward for making their payments. The first amount distributed under this approach is usually quite low, around 500 forints and gradually increases with each stage. The amount of the increments and final amount varies by industry and by individual case. Advantages to the entrepreneur include learning about capital investment, business calculations, payment discipline and all conditions required for the successful use of loans, based on a relatively small amount with low risks.[52] This method may not be monetarily beneficial in the beginning because of the limit on the amount of funds that are dispersed, but in the end it is very advantageous because of the knowledge the entrepreneur gains about how the financial system as a whole operates. It teaches the borrower to be responsible in paying back their loans by rewarding them with higher credit limits the next time they look to borrow money.
Under the system of cash-flow lending factors such as the future capability of the enterprise are considered before granting a loan. Collateral under this form of loan often includes the estimated revenues of the company, resolving the problem many small business face about what to post as collateral for a loan.[53]
Group Lending
Group lending is form of lending used more often in the CEE and underdeveloped countries than in countries like the United States. The name points exactly to what the terms of the loan entail: lending money to a group of people. Rules under this form of loan usually stipulate that if any of the members of the loan fail to pay, then none of the members of the group will receive money in the next stage of the loan. [54]
Szechenyi Loan Card
The newest form of sourcing approved by the cabinet in Hungary is a simplified system of working capital financing for small and medium sized enterprises know as the Szechenyi Loan Card.[55] Under this system a revolving credit line on low interest rate capital loans will be granted to companies that have fewer than 250 employees. In essence, the Szechenyi Loan Card is a form of credit card subsidized by the Hungarian government to small businesses. The government predicts The interest support will be reduced to 3pc [%] from 2003.[56] Businesses who receive this form of loan are required to pay 50% of the loan back within three months in order to replenish the credit line for other investors.
In order to qualify for this new form of loan, the company must be a member of the National Association of Small Businesses (VOSZ) or the Hungarian Chamber of Trade and Industry (MKIK) or any other organizations that may later join this cause.[57] Just as there are restrictions placed upon which companies may receive the loan, further restrictions are placed upon which banks may be allowed to offer this new loan. The banks that will be eligible will be chosen through a bidding procedure and Hitelgarancia Biiztosito will offer a guarantee on the loans.
Other Sources
There are a variety of different banks that offer sources of lending for companies in Hungary. Some of the international firms that provide funding are: European Bank for Reconstruction and Development, International Finance Corporation, European Investment Bank, and the World Bank. The Hungarian-American Enterprise Fund provides other sources of for private investors. European banks that provide financing for business within Hungary include, Giro Bank (Austria), Creditanstalt (Austria), ING (The Netherlands), ABN Amro and several other German Banks.[58][59]
8. Findings of Sources of Funding for SMEs in Hungary
All of the different sources of funding can be overwhelming, which is why they need to be put into perspective and evaluated years after their institution to see how they have been working for current business owners. This discussion in its entirety will be based up a study conducted by the Hungarian National Association of Small and Medium-Sized Enterprises, The Hungarian Chamber of Commerce, The Ministry of Commerce and Industry in Hungary, and the Hungarian Trade Commercial Office in New York. This study was conducted in 1999 using a sample of 280 small businesses in Hungary that have been in operation for at least one year.[60]
Appendix A shows the percentage of respondents that were in each type of industry. The service industry seems to account for the largest portion of the economy in Hungary. A juice company would fall into this category of service-oriented businesses. The percentages show that this form of business is very sustainable in the Hungarian economy.
Appendix B, C, and D show where the different businesses received their financing, non financial assistance, and business training and where they would have desired to receive it. The main source of financing appears to come from friends and family, which is often the same for small businesses starting in the United States. The least used form of financial assistance included the low cost long-term loans, also known as the subsidized loans. Many of the business owners expressed a wanting for further tax allowances and credits. One of the most significant findings is that about half of the respondents desired more management training programs including marketing studies, sample business plans, customer data analysis, information system development, and advertising.[61]
As far as the outlook and acceptance of entrepreneurial ventures in Hungary, most of the respondents reported that there was a high rating on economic growth and market opportunities and that the public attitude was fairly high.[62] The lowest rating was observed on promotion of entrepreneurial success.[63] Overall the results seem to point to the fact that Hungary is hurt because of the lack of preferences that are given to small business, high taxation, and the unavailability of low-cost, long-term financing.[64]
9. Status of a Juice Company
As the data has already pointed to, it is very difficult for a small business in Hungary to survive because of the strict policies and government regulations that have been placed on the financial systems. The most promising way to support a business in Hungary seems to rest on the ability of the entrepreneur to obtain funds from supportive family and friends. A way around this by an American businessperson may be to try to obtain all sources of funding from banks residing within the United States instead of relying on Hungarian financial institutions.
While it is true that Hungary is trying to move away from the large corporate and government business, this change is only taking place in the general non-durable consumer goods market such as apparel, cosmetics, etc. The only exception [to this trend] is the food and beverage market, which is ruled by large companies and cooperatives.[65] This dominance by big industry will create very high barriers of trade and make it very difficult to sustain a company even if the financing can be obtained. Exporting to Hungary does not provide a much better alternative for an ethically minded company because the only way the business can work would be by operating on the Hungarian black market.[66] Imports in the beverage industry are not allowed under Hungarian law, the government has placed high barriers of entry to help foster growth and protect the domestic industry.
This is in high contrast to the United States where smaller juice companies are on the rise because they are often able to appeal to the more health conscious or adventurous drinker. They do this by combining such things as vegetables and exotic fruits together to make new flavors.[67]
On the list of the Worlds Top 100 Food and Beverage Companies, none of them are operating in Hungary and the Danone Company at number 16 is the highest European company.[68] This shows that the market for beverage companies in Hungary and in the CEE in general has a very low level of participation, even for the major companies of the world. The European Union, the strongest bargaining unit other than the United States, only has eleven companies in the top one hundred as opposed to the United States, which has forty-six.[69]
10. Conclusion
Before a person can begin to analyze a financial market or any other aspect of a business, one must first realize what factors are included in the framework of the entrepreneurial environment. Finances are just one of the dimensions an entrepreneur needs to analyze before entering a new market.
For someone starting a juice business in the developing country of Hungary, it is important to understand the economists theories about lending in the country, in order to gain a better understanding of why a person will or will not receive funding. After initially analyzing the different theories it is important to study the history of lending in Hungary since 1990 and the fall of communism.
Examining the history of lending will aid in the understanding of the financial resources available to an entrepreneur in Hungary. This understanding might also help to explain why most companies in the country of Hungary tend to lean toward foreign investors to provide the capital needed for their business.
In order to determine whether or not a juice company would be profitable and successful in Hungary, it is important to further break down what resources are the most profitable, and what companies in that country felt were the most valuable resources. In the case of the juice industry in Hungary, it is clear that the beverage industry is left to the big industry and those that are operating out of the United States.
The elements of the environment provide for high barriers to industry imposed through high taxation and few incentives to enter the business. Hungary focuses its industry on the service sector instead of manufacturing and production, so a juice-making factory would probably not be highly profitable even if the owner could get the business started to begin with.
A juice business would not be a worthwhile venture to start in the country of Hungary, because the industry has high barriers to entry. Financing and investment provide the largest barriers stopping an entrepreneur in Hungary.
Bibliography
Csermely, Agnes, and Janos Vincze. Leverage and Foreign Ownership in Hungary. Russian and East European Finance and Trade 36.3 (May/June 2000): 6-30.
Fogel, Georgine. An Analysis of Entrepreneurial Environment and Enterprise Development in Hungary. Journal of Small Business Management 39.1 (Jan. 2001): 103-109.
Hungary Best Export Prospects. MATRADE. [Online] http://www.matrade.gov.my/Laman2000/Main/International/Network/Italy/Hungary/Hungar .. (17 March 2002).
Hungary. Ministry of Economic Affairs. Financial Environment: The Banking System Investors Handbook III. Budapest: Gov., 1998.
Kallay, Laszlo. Alternative Methods in Micro-Financing. Center for International Private Enterprise [Online] http://www.cipe.org/pub/cee/hungary/microfinan.php3 2001. (March 17, 2002).
Quality Drives Growth. Beverage Industry September 2000: 16-18.
SAIC Internet Solutions. Hungary Trade and Project Financing. Tradeport Trade Directory [Online] http://www.tradeport.org/ts/countries/hungary/financing.html 1995. (17 March 2002)
Szechenyi Loan Card to Help SME Working Capital Financing. Hungarian News Agency Corporation 6 February 2002: 1.
The Worlds Top 100 Food and Beverage Companies. Food Engineering Magazine. December 2000: 1.
12.
Glossary
Act on Foreign Exchange - contains the provision governing convertibility at a level required by the OECD and the International Monetary Fund
Capital - Wealth in the form of money or property used or accumulated in a business by a person, partnership, or corporation.
Capital adequacy ratios-a measure of the amount of a bank's capital expressed as a percentage of its risk weighted credit exposures.
CEE Central and Eastern Europe
Collateral Personal or real property that is pledged in a loan or contract to assure repayment of the loan. If the person defaults on the loan, the property will become the property of the lender.
Credit Crunch A sharp decline in real credits
Entrepreneurial Environment A combination of factors that play a role in the development of entrepreneurships.
Forint Hungarian currency
IMF International Monetary Fund
Leverage - The use of credit or borrowed funds to improve one's speculative capacity and increase the rate of return from an investment, as in buying securities on margin.
MKIK Hungarian Chamber of Trade and Industry
OECD - Organization for Economic Cooperation and Development
Revolving credit - A consumer credit line that can be used up to a certain limit or paid down at any time
SME Small and medium sized enterprise
VOSZ - National Association of Small Businesses in Hungary
13.
About the Author
My name is Angie Wichman; Im a junior in the
College of Business Administration at Creighton University in Omaha, Nebraska.
My major is entrepreneurship, which I hope to use to some day open my own law
firm. After this school year I will be
attending law school. This paper was
written for my entrepreneurial finance class during the spring semester
2002. I thoroughly researched all
aspects of Hungarian financing in order to put together this report, I hope
that it gives helpful insight to all who use it.
Appendix A
Of the businesses surveyed this is a breakdown of the percentage of workers in each kind of industry. The Small-scale manufacturing consisting of plastics, electrical components, timber processing, woodworking, and food production consisted of 32% of the applicants. Service activities, such as real estate, engineering designs, computer technologies, restaurant operations, travel, tourism, retailing, consulting, brokerage, and professional services accounted for the other 68%. The juice business would fall into the category for small-scale manufacturing.
Appendix B
This chart shows the financial assistance that is available to entrepreneurs in Hungary along with what they desire in financial assistance but did not necessarily receive.
Appendix C
This chart shows the same information except with non financial resources to the
Entrepreneur.
Appendix D
This chart shows the types of training and business skill programs that are available and desired by the business owners in Hungary.
