Bankruptcy & Failure: How Entrepreneurs Deal With It

Failure – still a failure in Germany Problem, mainly because many from Anxiety before that don't even start. My piece in the Financial Times shows why.

29.000 company incentives annually

Although there are around 29.000 company insolvencies every year, entrepreneurial failure in Germany is anything but normal: anyone who has to file for insolvency bears the brunt themselves Debt and is considered a failure.

It can meet anyone at any time - even if there are reserves.

Myopia with serious follow

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The shortsightedness, such breaks in the entrepreneurial Curriculum vitae Simply ignoring it has serious consequences for the corporate culture in Germany: Many do not even start their own business for fear of failure.

More in my post, published on 19. September 2008 in the Financial Times mid-size supplement.

Bankruptcy can hit anyone

“Bankruptcy can happen to anyone. And it can fast go – despite reserves,” says Attila von Unruh. The 48-year-old knows what he's talking about: the former co-owner of an eventMarketing-Company in bankruptcy. “A lot of people think that can't happen to them: only those who go bankrupt go with them Money can't handle or did something wrong," reports von Unruh about the reactions of his fellow human beings.

But that's not the case at all: "Of course there are also black sheep. But many were just unlucky.” In fact, management mistakes are less likely to be to blame for insolvency than external factors: personal and health problems, poor payment practices customers or bureaucracy. Particularly precarious: The tax office or health insurance company can also initiate insolvency proceedings if the entrepreneur owes them money - and sometimes they do this for a few thousand euros.

Insolvency administrators take the helm

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When the child falls into the well, a bankruptcy administrator appointed by the court takes the helm: he either refurbishes the company - or unwinds it. The administrator has more room for maneuver than the manager, for example in layoffs. The Companys stands and falls thus with the abilities of the insolvency administrator. So some refurbishment fails because of its lack of experience1.

Very often, however, bankruptcy could still be averted if entrepreneurs initiate restructuring measures in good time with creditors negotiate, get advice from outside or just the know-how of your Employees would tap into. Unfortunately, many do the opposite: they suppress problems, get even more into debt and hope that the Crisis will pass at some point - also for fear of being exposed in the circle of friends and acquaintances.

The reactions of the environment

However, the reactions of the environment depend very much on how you deal with the situation yourself: “Those who isolate themselves from shame because they can no longer keep up financially, for example, only provoke mistrust. When it becomes known that you are broke, everyone says: 'I knew something was wrong.' reports of balance and advises openness.

Since the not everyone light falls, he founded the Anonymous Insolvency Discussion Group: “It is important to talk to people who can understand the situation. In addition, there are different people in the group Competencies represent; we give each other valuable tips and gain new perspectives.”

Get back on your feet - difficult

They are also necessary, because anyone in Germany who wants to get back on their feet after insolvency has a hard time. Apart from the fact that the debt relief period of six years is quite long in international comparison: Many banks no longer give bankruptcy credit to start a company again. Finding an apartment is also difficult when the Schufa information negative fails.

In addition, for some trades, an authorization is required which is linked to the financial capacity which must be demonstrated by means of a tax assessment of the tax office. Another problem: An employment is difficult to find for older ex-entrepreneurs. These difficult conditions mean that some insolvency workers land in Hartz IV or in the Schwarzarbeit, instead of bringing their experience into a new company.

hope

But there is hope to get out of the devil's circle: A new foundation during the insolvency proceeding can only take place in consultation with the insolvency administrator, since the insolvency mass is liable for the arising liabilities.

Within the Financing State subsidy programs or guarantees and the employment agency may also help. "And you can also live as a sublet," explains von Unruh, who claims to be systemic Training and restructuring advisor has made it self-employed again.

Restarter are more successful

Studies show that restarters earn more money on average than first-time founders. The EU has now also recognized this potential and wants to simplify the restructuring of companies and the economic restart of honest debtors.

This is important because, while in other countries, there is a long way to start something new after a failed attempt, this culture of failure is missing in Germany.

Many are afraid of failure

Accordingly, almost half of the 18-64 year olds in this country bury the Idea Business start I'd rather do it right away - out of sheer fear that it could go wrong. The fact that Germany is far behind in an international comparison with this rate is not exactly an advantage for the business location.

On behalf of the Kreditversicherungs-AG and in cooperation with the ZIS, the KOHORTEN Institute interviewed 2007 insolvency administrators in the summer of 106, among other things, about the reasons that prevent more frequent corporate restructuring in Germany. Next to missing Capital the lack of experience of the insolvency administrator and the insolvency administrator wrongly appointed by the court were given as reasons.

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