Does forming a company worth more in Budapest or in the countryside? Doing business in cities and in the countryside most of the time is different. Different expectations, different thinking, different people, differrent possibilities, different ages groups…

There are advantages and disadvantages as well. Let’s take a look on this topic!

Well, Hungary is quite single-poled from the industrial or business points of view. The capital is in the center not just by the geographical side but also by the business, logistics, purchasing power side. This last one becomes extremly true if we include the tourism: about the half of guest nights had been registered in Budapest. An other about twenty-five per cent at the Balaton region, but here the main saison is just a few month and depends so much on the weather…
Out of the facts mentioned above brain-drain is still an important factor what we have to consider in order to understand why business in Budapest looks to be easier than out of it. Even if we suffer the lack of well educated doctors, engineers, ICT experts but skill workers as well.

But in the other hand starting your business in Hungary out of the capital sometimes might be in real easier. Huge, international companies might had the raison why to move theirs factories, (logistical, customer, etc.) centers or storages to the hungarian countryside. Just like Audi in Győr, Suzuki in Esztergom, Opel in Szentgotthárd, Mercedes in Kecskemét. But other branches of industry are represented there: Jabil Circuit in Pécs, Szombathely and Tiszaújváros, Spar in Bicske, Tesco in Budaörs, National Instruments in Debrecen, Nokia in Komárom, Philips in Székesfehérvár, Samsung in Jászfényszaru, or GE and Bosch who has several sites. And I could go on…

Of course can be said that these multinatioanls is easy to open anywhere, they are like magnet companies. Attracts more and more smaller-bigger firms. And because of this and also as they open thousands of new positions and raising GDP governments give them tax discounts or big areas to use for free. Not to mention that basicly they had had enough capital.

But the fact is that for small companies it also worth to consider to move to the countryside -especially if theirs entrepreneurship is attached to the internet. But let’s make a fast checklist.

Internet

The easiest to explain. Internet doesn’t know borders. You can send e-mail, orders, feedbacks, handle customer complaints from everywhere (where you have signal for your mobile internet).

Logistics

Even if the capital is in the middle-North of Hungary highway network is very well developed. So if you are planning to store or carry goods it’s much cheaper out of Budapest. And none of the borders are far on the highways. Cheapness is going to shown especially if in a while the local government of Budapest will start the “traffic jam fee” in the inner districts -where anyway it’s very difficult and expensive to rent storage or any other kind of industrial immovable.

Taxes

Local business tax somewhere is 0%. Actually there are hundreeds of towns like this, where companies can save this 2% (of the income) tax. In the other hand for example carrier companies pay the vehicle tax for that specific town’s cityhall. Also: the more company a town has, the more service can be provided, the more people moves there, the more money they can bid for. Win-win.

Lower wages

Unfortunatelly this is also a point of view. The far we leave Budapest the lower the salaries are. At the same time prices of goods and services don’t fit to this tendency so unemployment as a need make competition what depresses the salary claim. So it is bad to say but in one hand it would be stupid to pay more for something what you can get cheaper. On the other hand of course if you feel bad for the low salarires: you can pay all the time more if you want.

Agriculture

Very easy. All the soils are out of Budapest.

Tenders

Countryside regions were promised to get almost 3000 billion HUF on tenders from Europen Union sources. In Budapest this ammount was 255 billion HUF.
An other aspect: in the central hungarian region the intensity of the support decreases to 10-20% for machine procurements. Out of Budapest this can be up to 70%.

Personal relationships

I had not been born in Budapest but in the South of Hungary. I used to live in Debrecen (in the East) as well. And of course I hear it nowdays too. In towns it does matter who you know. The longer time you know someone the more he trust you and finally your service. And it works even if your competitor has a better offer but he is unknown.
Last but not least: just imagine, how much you can save if you share your tools and experience with your friends or neighbours instead of paying for an outer person or for a “tools-to-let” company.

Real Estate

In counties out of Pest county (regardless of a few exceptations) immovables are cheaper. Next to the borders, especially close to Autria where a lot of people travels in a daily basis to work, prices are higher than in avergae, but still not as high as in the capital.

So shortly: there are both advantages and disadvantages for both to start business in Budapest or in the countryside. In Budapest you can find everything faster, in the countryside business life might be cheaper.

And if you still can not decide: contact a local expert, tell him your story, and in both cases you can save a lot of time and money by getting all the relevant informations from the same person in the same time.

Business Management Hungary
www.businessmanagementhungary.com

published on LinkedIn 13/05/2015 by Business Management Hungary