It was a fascinating day at the Hungary House HBBA Invest Fest, where enthusiastic entrepreneurs were eager to meet hard-nosed VCs, in the hope of finding a sympathetic ear to their dream concept. This is sometimes called ‘speed dating’ but it’s much more stressful and one-sided than trying to meet a life partner!
The hopeful founder, clutching the pitch deck which they pray will open the door to funding success, arrives with a mix of enthusiasm and nervousness as they scour the room for friendly faces. Keen to tell anyone who will listen about their groundbreaking idea which will be the next big thing if only they can put some fuel in the tank (money) to allow them to drive to their dream destination (an exit in 3 years)
On the other side of the room, the VC is less enthusiastic and certainly not nervous. He or she holds all the cards, more pitch decks on the desk than can be read in a year, and the cash everyone needs to fulfil their dream. The power is with the VC and they know it.
The dance then begins. The founder has the pitch prepared and well-rehearsed, small talk kicks off the session but no one really cares about the weather or which football club they support. In this sense it is like dating, the first nervous drink at the bar, the surface-level chat about the train being delayed, the surprised look when they both realize they went to the same gym years ago. All the while working out ‘Do I like you’
So back to fundraising. The founder delivers the pitch, and the VC, poker-faced, asks the usual questions, ‘Why hasn’t someone done this before’ ‘Do you have skin in the game’ ‘How much do you need’ The founder sweats and hopes they see a flicker of interest from their ‘date’ This is their dream, why isn’t it obvious to everyone all it needs is some initial cash to make a fortune. The founder’s wife and family think it’s a brilliant idea, surely the VC will too.
Every business has done this dance, without founders no business would exist, without VC’s not many would exist. The debt of the brands we all know is eye-watering ( Tesla $3b, Apple $108b, Spotify raised $1.3b in one year) so even the major corporations have to dance the fundraising tune.
The paradox is the VC has all the power, but unless they invest their returns are zero. So in a way the VC is as dependent upon the speed daring as the founders are. In order to shift the power the founder needs to do a few simple things. First is to stop talking about their business like it’s their favourite child, the VC, like most of us doesn’t care about your child. The second is to craft a world-class elevator pitch, 60 seconds of pure genius. This replaces the 10 minutes of droning on about this being the best thing since bread was sliced. And thirdly talk about customers, and subscribers, more than the products.
At the end of a wonderful Invest Fest, there were a few happy faces, the date had gone well. The founder had found an ideal partner, the VC had already worked out the exit multiple as they phoned to tell their boss the good news. But sadly some founders walk away deflated and frustrated, the VC’s just ‘didn’t get it’. Next time will be better if they tell their supportive spouse.
My tip for a successful date next time works, follow those simple rules and the date will go so well it will turn into a long courtship, children and a wonderful family.
Bilateral trade agreements are fundamental pillars of economic growth and global prosperity, fostering mutually beneficial relationships between nations. The bilateral trade connection between the United Kingdom and Hungary stands as a testament to the profound impact of international collaboration on economic development. In this blog post, we’ll delve into the significance of bilateral trade and explore how the UK and Hungary have forged a robust economic partnership to drive growth and innovation.
Mutual Economic Benefits: Bilateral trade agreements facilitate the exchange of goods, services, and investments between countries, leading to enhanced economic cooperation and shared prosperity. For the UK and Hungary, bilateral trade serves as a vital engine for economic growth, creating opportunities for businesses to access new markets, expand their customer base, and increase profitability. By leveraging each other’s comparative advantages and complementary strengths, both countries can maximise their economic potential and drive innovation across various sectors.
Market Access and Diversification: Bilateral trade agreements provide businesses with preferential access to foreign markets, reducing trade barriers such as tariffs, quotas, and regulatory restrictions. The UK and Hungary benefit from enhanced market access through their bilateral trade relationship, enabling companies to explore new business opportunities, establish partnerships, and diversify their export destinations. By expanding market reach and tapping into diverse consumer preferences, businesses can mitigate risks associated with domestic market fluctuations and achieve sustainable growth.
Strengthening Diplomatic Ties: Bilateral trade agreements foster economic integration and contribute to the strengthening of diplomatic relations between nations. The UK and Hungary have cultivated a longstanding bilateral partnership based on shared values, mutual respect, and a commitment to promoting trade and investment cooperation. By engaging in dialogue, collaboration, and diplomatic exchanges, both countries can address common challenges, build trust, and foster goodwill, laying the foundation for long-term cooperation and friendship.
Promoting Innovation and Competitiveness: Bilateral trade agreements stimulate competition, innovation, and entrepreneurship by fostering an environment conducive to cross-border collaboration and knowledge exchange. The UK and Hungary have established thriving innovation ecosystems characterised by research institutions, technology hubs, and startup incubators, driving advancements in technology, healthcare, and renewable energy. Through bilateral trade, businesses can harness the benefits of shared expertise, resources, and best practices, enhancing their competitiveness and accelerating economic growth.
Facilitating Investment Flows: Bilateral trade agreements play a critical role in facilitating investment flows between countries, encouraging foreign direct investment (FDI) and stimulating economic development. The UK and Hungary have attracted significant investment from each other, with businesses seeking opportunities to expand operations, access talent, and leverage strategic advantages. Bilateral trade agreements instil confidence and encourage long-term capital inflows, fueling economic prosperity and job creation by fostering a conducive investment climate and providing legal protections for investors.
In conclusion, the bilateral trade relationship between the UK and Hungary exemplifies the transformative power of international cooperation in driving economic growth, fostering innovation, and strengthening diplomatic ties. By embracing the principles of free trade, mutual respect, and shared prosperity, both countries can harness the full potential of bilateral trade to create a more prosperous and interconnected world. As global challenges continue to evolve, bilateral trade remains a cornerstone of economic resilience, stability, and prosperity for nations around the globe.
Secure your place and find the team to accelerate your dream.
The idea of transforming a dream into reality fills most people dread. It’s the magnitude of having to invest the very best of your self, your time, your talent and your treasure. You have to learn to handle failure, judgment and live with constant uncertainty and regular challenges that can come at a moment’s notice. Sounds scary right?!
Well, for the crazies, the dreamers, the innovators, disrupters, visionaries, mavericks and those who just want to change the world, this is the life they choose to live that few talk about.
Despite the negatives, the rewards of leaving a legacy drive and inspire us to live out our dream and go for it. The rewards are greater than the risks, so we just can’t do “normal”. We want more than a mundane life can offer.
The HBBA InvestorFest ’24 was birthed for visionaries who dare to dream globally. Their journey cannot be done alone and that is why we are offering international support.
The deadline for registration is 15th March 2024 and it will be held at Hungary House, 17-19 Cockspur Street, London, SW1Y 5BL, on the 26th March 2024 from 2.00pm – 7.00pm. Book your place now!
Why not plan for the HBBA InvestorFest ’24 by preparing how you pitch your business, ahead of time, and make the most of every opportunity with every investor?
Here are the three essential tools we recommend to accelerate you into the spotlight and make you more investable:
Business Model Canvas.
One of the best tools for entrepreneurs that serves as a one-page business plan.
Most banks are happy with a one-pager, together with your figures, and most investors don’t have the time to read through many pages to pull together your story.
A business model canvas is a game-changer for budding entrepreneurs and seasoned pros alike looking to communicate the shape of their business.
One Pager:
Your business profile. A snapshot at a glance showing a brief overview of the whole project is great for a pre-meeting.
A one-pager gives a condensed outlook of the vision and should convey what you are ultimately trying to achieve. It won’t answer everything, it rather serves as a more detailed profile of your business.
Here are a few subjects you need to make sure the one-pager covers, remembering that a one-pager is the size of an A4 piece of paper.
>Business Summary: Overview of the business approach.
>Vision: The end goal, level of impact (even better if you have a metric in it)
>Problem: What is the pain your audience is suffering?
>Your Solution: How you soothe the pain with the promise
>Competitive Advantage: Why you and why now?
>Target Market: Size of the opportunity and market share you are looking to go after
>Team:
A list of the key stakeholders
Slide Deck:
Don’t punish your audience with PowerPoint. Sitting through 52 slides is a shockingly bad use of time for anyone, including you. In reality, you need to be able to tell a clear story intentionally.
Make sure your story includes 5 key things:
>Design – If you are asking for £500,000, then invest something in design. A cheap-looking presentation is telling investors that their money isn’t safe. >Disrupt – What is the level of impact your product or service will bring? What makes you different from what is already out there?
>Distance – Who are the team behind the dream? Make sure you show who they are and how they have invested already.
>Data – Show the size of the opportunity once an accountant has taken a look at your projected numbers
>Decide – What do you want? Make sure that what you are asking is clear and that the decision to invest is easy.
Slide decks are rather like CVs, people have seen thousands, so make yours memorable – 12 is enough.
If you are brave and feel that you can’t get all the information in, then a video is advisable, no longer than 60 seconds.
SUMMARY:
People invest in people.
Too many people get the investment focus wrong. Investors invest in people and while an ROI is important, interpersonal clashes will make life unnecessarily difficult.
Just as much as the investor has you under a microscope, you also need to ask the right questions to determine if they are the right fit for you. Do your research, get your testimonies and understand their success and track record.
Masterclasses are a great way of engaging your community at a deeper level and giving added value that would otherwise cost thousands.
The Hungarian British Business Alliance has made the epic decision to create HBBA MasterClass, so you can grow with HBBA in collaboration with Distruption Banking, our Media Partner.
Bringing together a small class of twenty- five in this way can help you find others on the same journey as you.
You can then strengthen business relationships, taking them from transitional to transformational.
The Masterclass will take place every quarter, with our first event on Tuesday, 13th February, in Canary Wharf, from 2.00 pm until 5.00 pm, (other dates to follow). We will have an amazing view of London on Level39, One Canada Square (meeting room for 25 guests), London, E14 5AB
These quarterly educational Masterclasses will showcase 2 valued HBBA Members and a guest speaker will be invited.
The first class will be around “Transformational leadership in times of change” with an incredible first lineup!
Karen Holden – Founder, The City Law Firm
Gyongy Szabó – Founder of Best Chapter Limited
Mark Wilcox – Founder of Business Step Up
Here are some more details on our fantastic speakers, Karen Holden, Gyongy Szabó, and Mark Wilcox:
Karen Holden is part of the driving force behind The City Law Firm. She is an entrepreneur so she understands the struggles common to many of us as entrepreneurs. Karen developed a thriving corporate firm from scratch and secured its place firmly in the City. She worked hard to establish a firm that could provide experienced and dynamic solicitors in the City of London who could think outside the box, whilst delivering at competitive costs.
Gyongy Szabó is the founder of Best Chapter Limited who help senior healthcare leaders gain clarity on their next career move and confidently secure their future while finding fulfilment and amplifying their impact. Gyongy’s level of experience helps her clients build businesses that retain and plan with a team for the long haul. Having a team in place and doing the right things at the right time, gives clients’ businesses alignment for their assignment.
Mark Wilcox has spent the best part of the last 20 years equipping businesses to thrive in unfavourable conditions, together with his wife, Susanne Wilcox. Business Step Up is about helping you step up and not shrink back in these challenging times and make a decision to be victors rather than victims of the cost of living crisis.
Our masterclass will also allow you to converse with Andrew Samu, CEO at Disruption Banking. Publishing disruptive content since May 2018, they can give you the latest news about the Cloud, Blockchain and Artificial Intelligence and how that affects global Banking and Fintech StartUp communities. An excellent resource that keeps you ahead of the technology successes from the US, Canada, Japan, Korea, China, Europe, Australia, Israel, India and many other parts of the world.
As you can see, we have a packed programme for the first masterclass event.
The HBBA Masterclasses aim to significantly help anyone looking to build a business and we aim to communicate the following three key principles to our delegates:
Always be learning:
Often we stop learning from school and university, yet the people who are making progress understand the power of investing in education. In an age of information, you have no excuse not to be learning! It’s about deciding to stop wasting time scrolling or watching endless boxsets, a decision to continue to invest in you. Masterclasses combine learning and networking, so you can build your tribe as you thrive.
Always be open:
Looking for new collaborations. Stop looking for business and start building relationships. The deeper the relationships, the more opportunities you will find. It is all about serving one another rather than selling and HBBA has worked hard to create a community of collaboration.
Always be making friends:
People who say business isn’t personal are losing out with the emergence of a fresh demand for authenticity. Making friends in business helps you get ahead, with people looking out for you and seeking opportunities on your behalf. When you have friends championing your cause you get more conversations. Masterclasses are a great way to reinvent your circle, extend it or even create a brand-new one!
So, don’t miss out on booking your spot! You can book here and claim your place. We know these will be in high demand for 2024.
Building Bridges is about creating opportunities and the masterclass enables us to do that and deepen relationships between the UK and Hungary.
This commitment to growth will definitely “upskill” your business with the help of some of our high-performing members.
Statistics say that it takes 10,000 hours to master something and the people that are in the room have spent far more time than that mastering their craft which is why we are giving you access to learning more.
As we reflect on the year gone and get ready for a fresh new year we can’t ignore the fact that 2023 has been nothing short of phenomenal, We have travelled far as an organisation and more importantly, we’ve grown together as people.
At the heart of what we do at the Hungarian British Business Alliance is our desire to build bridges. It’s all about connecting Hungarian and British Companies who want to work together and impact their respective countries and communities.
On 12th December, we celebrated the end of year in style with our HBBA members and VIP guests. We had the honour and privilege of welcoming our valued members to the beautiful Hungarian Embassy in Belgravia London. Our host was Judit Czakó and the team from the Embassy of Hungary in London set the tone for the evening as H.E Ferenc Kumin, Ambassador provided an opening address and Peter Wilcock Non-Exec Chair made a speech about “An English Man in Budapest.”
On the prestigious guest list, we had Lord Waverley from the House of Lords, International Affairs, Centre of Trade Transparency and Monitoring ITC Emerging Markets, Andrew Lambert, Chair of the IoD International Trade Group, Founder and CEO at Electronic Media Services Ltd and Dr Gergely György Balázs, PhD, CEO of Rolls-Royce Hungary.
So, how have we travelled so far in such a short time? Well, the answer is held in the values we carry, based on the word that makes everything we do connect. It is the word N E T W O R K (see below) and the focus of why we do what we do hasn’t changed – HBBA generates business opportunities for focused entrepreneurs through inspiring events that create financial and personal success in communities.
Focusing on our values will ensure that 2024 will be bigger and better than ever.
It all starts with…
Networking:
Our mission,Making connections through trusted relationships to grow successful businesses globally. At the heart of all we do is a commitment to create networking opportunities that are unique and unrivalled. These connections are for people who want to take their business and go from local to global. Despite the negativity in the news, we are bucking the trend and providing hope and help to businesses that want to scale.
It is about us being…
Entrepreneurial:
HBBA is a business built by entrepreneurs who are passionate about making an impact. Our vision is ambitious! To be the leading Hungarian & UK business community that impacts thousands of business leaders to grow their international reputation and scale their businesses. So, when we say we want to make it happen, out vision drives us to do so with verve and steel. While a global economy appears uncertain, the strength of relationships in the entrepreneurial world is the backbone of recovery and the inspiration behind a positive future.
We bring the very best innovators, leaders and business owners into our world of opportunity. Our entrepreneurial mindset allows us to always look for every opportunity to be better, do better and outperform other network organizations. We get to know our members personally to ensure you get the very best connections and value from your investment with us. We have seen some wonderful people from the world of sport, commerce, investment, media, FMCG, automotive, fashion, finance and banking, legal, coaching, health and wellness join us, share their insight and make us stronger.
Establishing what it means to be…
Trustworthy:
Trust is the platform from which we launch a thousand dreams. It’s this trust that affords us the unique relationship with our hundreds of members and associates. Ego can go, we are looking for collaborators with a passion to make an impact.
As a result of being trustworthy we have had thirteen events including networking and masterminds throughout 2023. These have ranged from our two-day prestigious event in London, to our 3-day Budapest Trip that included Networking Galore, In-Depth Seminars, Business Matchmaking, Cultural Experiences in collaboration with the Embassy of Hungary and the Hungarian Export Promotion Agency.
The British Delegation of 30 businesses visited Rolls-Royce, Torley, Hungary’s biggest Champagne and Wine Production company and a prestigious dinner at Halaszbastya Restaurant overlooking the whole city.
These amazing events have seen us host over 900 guests with close to 50 of our members taking the stage to share their expertise and insights. We trust our members implicitly and the value they have brought has impacted many of our businesses for good.
Focusing on the power of…
Winning:
You hear a lot of talk about competing, but we like to focus on completing. In essence, we all win when we work together. In an economy of over 6 billion a year, there is space for everyone to flourish. We celebrate every success together! On our amazing Christmas event we had two of our HBBA members, Niki Kerr and Csaba Bartal share their journey with us. They shared glowing testimonials of their time as members of HBBA that inspired everyone in the room. We have also enjoyed the amazing musical talents of Maxyne Ryan at two of our largest events – we didn’t even have to look outside the network to find a performer who could help facilitate a great experience.
Winning isn’t about who you can beat on the journey, it is about serving each other and helping each other to succeed. If you’ve never thought about joining us, we encourage you to attend an event and ask our members for yourself. We don’t have to sell the experience, we’d rather show you what you’re missing out on.
Embracing what it means to be…
Open:
There is nothing worse than going to an event and feeling alone. Our commitment to being open ensures that when it feels lonely at the top, being part of HBBA ensures you are never alone. We understand business and we also know the right person to help at the right time. That is what makes our network as deep as it is wide. That said, being open for every opportunity has seen us transform from two countries to five!
With that open mindset in place, what does 2024 hold for HBBA? Well, we are looking to continue the London / Budapest exchange events which bring together business leaders from the UK and Hungary for a number of days. As previously mentioned, the franchised events in Scotland, Germany and Dubai are looking to have a full programme and their dates will be released in Q1 of 2024. Every member of HBBA has exclusive access and priority to attend these events, maximising the full value of membership at every level.
The strength of being…
Reliable:
One thing we know we need in times like these is stable people who you can count on when life doesn’t go to plan. We have some leading experts in the realm of mental health and well-being, as well as experts from the world of finance. The network boasts reliable people whose expertise can help with every season of business growth. When you are looking to increase your numbers you need people you can count on, whether it’s sales, marketing, strategy, leadership or culture, you need people who are used to delivering exceptional solutions.
Among the highlights for 2023 was the extensive redesign of our brand, communications and website www.hbba.uk that allows us to expand our brand internationally. Scotland, Germany, Dubai and beyond will fly the flag with a consistent image and experience wherever we host events and launches. We would like to thank Darrell Irwin and the Cre8ion team for making this happen. Their expertise is growing a strong reputation within our network and having experienced what they can do, we can’t thank them highly enough. That is the power of working with a reliable team.
The wealth of being…
Knowledgable:
One of the things that make HBBA so different is our wealth of expertise.
We have access to the world’s greatest entrepreneurs through networks and partnerships already connected to us. Want to head to Necker Island? We can make it happen. Want to get in front of a key investor? We know who you need to speak with and can help you prepare beforehand.
As our memberships continue to grow and scale at record levels each successive event is getting larger. We have attracted industry leaders from corporate giants and billion-dollar companies (such as Harley-Davidson and Rolls-Royce) while also getting thought leaders from The Premier League (Stephen Caulker, Ex Liverpool and Tottenham) and visionary professors from universities such as Prof Issa, the London South Bank sharing on ESG.
2023 has been an exceptional year for the team at the Hungarian British Business Alliance but we want to say a huge thank you to all our members, partners, hosts and visitors! We hope that 2024 will be your year for extraordinary endeavours and we will be delighted to support you on your journey.
Susanna Toth Lee / CEO Paul Smolinski / Director of Global Relationship
What should you charge for your service, £80, £150, £250 or should you do things for free?
It’s 6.15 am here in the Pan Pacific hotel in Toronto and I just woke up with this in the forefront of my mind, after day 3 of the fabulous 5 day architecture of hypnosis course with Mike & Chris, and the MMHA team.
And as I’m waking up, I recalled the story of a large ocean bound container ship, stuck in port with an engine problem, this was in the 1990’s..
The ship was destined for departure and it had a technical problem with the electrical system that was failing to enable the engine starting procedure to commence.
The onboard engineers tried their best to find and fix the fault without success as time crept on.
The captain ‘Stephen Wilson’ was under pressure to meet connections at transatlantic ports for the onward passage of the containers to their final destinations, it was a well connected puzzle all depending on ‘just in time’ delivery schedules.
Delays had onward compounding issues with failed delivery slots, so being on schedule was vital. In fact it was so vital that the shipping company was at risk of suffering fines of $22,000 for each delayed hour of departure.
It was a tough decision to overrule the capabilities of his trusted onboard engineers, but the Captain decided to get external help. He knew of the chief engineer ‘William Giles’ at the original ship yard that helped design his ship, in fact he knew him from school as they grew up together.
Stephen reached out to William for help and unfortunately, William was chuffed to hear from his old mate, but was also up against his own schedules.
As William was driving home from work that day after chatting with Stephen the Captain, he wasn’t really paying attention to his driving, actually he was thinking about the problem with Stephen’s ship.
He had a moment of inspiration, pulled over and rang Stephen to say he had an idea and was on his way.
4 hours later he arrived at the port with an electrical test meter and a packet of electrical components.
The clock was ticking with the potential delays and by sunrise the first fine would kick in. Time was against the shipping line.
William passed through security and was escorted aboard the ship, with his test meter and bag of electrical components.
He entered the engine room and carried out 3 tests within the secondary control panel and identified a resistor that was faulty. This component is the size of your little finger nail and prevents an unsafe engine start by measuring resistance.
Within 20 minutes of arriving onboard, the resistor was changed, the problem resolved and the ship was able to depart.
So back to my question.
What is the value of the solution?
Was is the cost of Williams time, 4hrs 20 mins and a resistor costing $4.25
Or was it avoiding $22,000 per hour
So what did William get paid? I’m going to leave that to you to work that out!
And remember please…..
Clients do not pay you for YOUR time. They are paying for YOUR expertise to solve THEIR problem….. that’s priceless because it’s not your problem, it’s theirs.
And that’s why I charge based on the value of the problem I’m solving for my clients, and not on MY value of MY time.
Choosing a great business mentor and coach is a critical decision that can significantly impact your professional growth and success.
Here are key factors to consider when selecting the right mentor and coach for your business journey:
First: Assess their experience and expertise. Look for someone with a proven track record in your industry or a related field. Their practical insights, knowledge, and successes can provide invaluable guidance as you navigate challenges and opportunities.
Second: Compatibility and rapport matter. A strong mentor-mentee relationship is built on trust, respect, and effective communication. Seek someone whose values align with yours, and with whom you feel comfortable discussing your goals and challenges openly.
Third: Consider their coaching style. Determine if their approach aligns with your learning preferences. Some mentors are hands-on and provide specific instructions, while others encourage self-discovery and offer guidance through probing questions.
Fourth: Seek feedback and recommendations. Reach out to others who have worked with the potential mentor or coach. Their experiences can shed light on the impact and effectiveness of the mentoring relationship.
Fifth: Availability and commitment are crucial. Ensure the mentor or coach has the time and willingness to invest in your development. Regular and meaningful interactions are vital for ongoing learning and growth.
Sixth: Evaluate their ability to provide constructive criticism. A great mentor offers not only praise but also challenges you to improve. Constructive feedback helps you identify areas for growth and development. Seventh: Consider their network. A well-connected mentor can introduce you to valuable contacts, potential clients, or partners. A strong network can accelerate your business’s growth and increase your opportunities.
Eighth: Assess their adaptability. The business landscape evolves rapidly. Look for a mentor who stays updated with industry trends and can guide you through changing dynamics.
Ninth: Clarify expectations. Discuss your goals and what you hope to achieve through the mentoring relationship. A clear understanding of expectations ensures both parties are aligned and committed.
Tenth: Be open to diversity. A mentor from a different background or perspective can offer fresh insights and challenge your assumptions, fostering innovation and creativity.
In Conclusion: Selecting a great business mentor and coach involves careful consideration of their experience, compatibility, coaching style, feedback, availability, willingness to challenge, network, adaptability, and shared expectations. A well-chosen mentor can offer guidance, inspiration, and support as you navigate the complexities of entrepreneurship and business growth.
Mark Wilcox MEng, Dip. Psy, CMktr, FCIM, FISM
Business Set Up Managing Director Telephone: 02920 666605 Mobile: 07775 825248 Email: markwilcox@businessstepup.com Web: www.businessstepup.com
Hungary enjoys a particularly strategic location in Central Europe. The country poses attractive business opportunities for international trade and small medium businesses or established corporates, thanks to its export-driven and open economy, which has been on a fast track to growth in recent years. Based on numerous sources Susanna Toth and Steven Paul of the Hungarian British Business Alliance (HBBA) shares a renewed perspective for firms wanting to explore or grow their businesses in the markets, and an outlook for 2023 and beyond.
Why is Hungary Important for International Business?
Foreigners doing business in Hungary will benefit from the educated and skilled workforce and business culture, which is close to that of Western countries.
Like many countries in the Europe, Hungary transitioned from a centrally-planned socialist economy to a market economy after the fall of communism in 1989 and has been a member of the European Union since 2004. The capital city, Budapest, hosts offices of many multinational companies, including Microsoft, Pfizer, IBM, and Ericsson, and is a center of technology and innovation.
According to Uniworld, Hungary has over 400 wholly-owned US companies, while the government states that US affiliates employ 110,000 Hungarians.
Foreign direct investment in Hungary has helped to improve infrastructure, modernize industries, boost exports, create jobs, and put growth on the fast track. Since 1989, the cumulative FDI stock accounts for more than $98 billion and is focused on key sectors like IT, automotive, agriculture, etc.
To stimulate even more foreign investments, Hungary’s corporate tax is at 9%, making it one of the countries with the lowest corporate tax rates in the European Union.
The country ranks 52nd out of 190 countries when it comes to ease of doing business. It landed the first spot when it came to trading across borders, was the 25th best country for enforcing contracts, and did quite well at registering property as well (DB rank 290.
Unique Features of Doing Business in Hungary
Hungary’s direct investment abroad expanded to $1.6 billion in March 2022. According to Trading Economics, Hungary’s Foreign Direct Investment is forecasted to rise to around 594.05 million Euro in 2023 and 598.26 million Euro in 2024.
Foreign investment has a considerable impact on Hungary’s business environment. As a result, business opportunities in Hungary are rife and quite accommodating to foreigners. Aside from an excellent geopolitical location, Hungary has various benefits to offer.
As a part of Central Europe, Hungary connects Eastern and Western Europe and continues to be a social and economic hub in the region, but also for global interconnection into Europe. The country is at the crossroads of three of Europe’s transport corridors, has the highest motorway traffic in Europe, and has four regional business and three international airports.
The country’s geographical location means it can make morning calls with Asian countries and afternoon calls with the US, which is why it is one of the preferred locations for shared service centers and a perfect place to establish a business hub.
Hungary also has one of the lowest capital requirements in Europe. For a corporation, the minimum capital requirement is 18,000 euros, and for an LLC, this requirement is further reduced to 10,000 euros. To put things in perspective, a joint-stock company in Germany will need a minimum capital requirement of 50,000 euros.
This means businesses will have less of their capital locked up, and it is another great reason to invest in Hungary.
Businesses that are looking to employ talented human workforce at a beneficial cost can do so in Hungary. As of December 2021, the labor force consists of 4.7 million individuals. The country has a low unemployment rate of 3.6%, a minimum wage of 563 euros, and a minimum wage for skilled workers of 732 euros.
Personal income tax is at 15%, and the employee’s contribution is 18.5%. Employers have a social tax rate of 13%, and they can apply for various social tax allowances for certain employees as well.
The country also has an advantageous corporate income tax rate of a flat 9%. There is no withholding tax or requirement for any outbound payments made to foreign business entities. Local businesses may be charged a tax anywhere between 0 to 2%. Dividends are also exempt from corporate income tax unless received from the CFC. Furthermore, it also operates a participation exemption regime for the purpose of capital gain taxation as well as a favorable group taxation regimen. Foreigners may also get the opportunity for VAT-free trading.
Keep in mind, though, that Hungary is not exactly a tax haven. It is a member of the EU, OECD, NATO, and the WTO and offers valid solutions for tax reduction.
As a part of the EU, much of Hungary’s legal business climate is in harmony with European law. The country allows new business entities to be established in various forms, but the most common type is a limited liability company.
In many simple cases, it takes no more than a day or two to register a Hungarian company. The associated costs are considered quite low in the EU. Another benefit of doing business in Hungary is the wide range of incentives offered by the government to increase competitiveness.
Hungary offers a maximum regional aid fund that varies from 30% to 50%. In some cases, the aid may be increased for SMEs. In addition, counties eligible for Just Transition Fund may get an additional aid of 10% if the EU Commission approves of their status.
The government also offers a VIP investment cash subsidy, which is designed to attract investments in the manufacturing and shared service center sectors.
Another major cash subsidy opportunity based on individual government decisions is the Investment Aid Scheme for Large Enterprises, which was created to promote investments in the industrial sector and in storage and warehousing.
Furthermore, businesses may also be eligible for various tax incentives for energy-efficient investment projects as well as subsidies from the EU funds.
Market Challenges in Hungary
Hungary’s regulatory climate can make it a bit more challenging for companies to set up businesses in the country. The value-added tax is at 27% for more products and services, which is the highest rate in the EU. The country is also unfortunately plagued by persistent corruption, which has a big impact on the public sector. Hungary is listed among the top most corrupt EU states. In 2016, the government withdrew from the Open Government Partnership after it refused to address concerns about good governance and transparency.
To start a business in the country, you may have to follow some extra requirements. Companies need to be represented by a lawyer when setting up a business in Hungary. Half of the subscription amount needs to be deposited into the bank amount when subscribing. Plus, the business also needs to submit the Registry Court applications before social security can be set up.
To get a construction permit, a business needs to navigate 26 complex procedures, which take about 102 days. Several inter-governmental departments will carry out inspections before the company can get a statement from the Municipal Planning Committee and a letter from the Tax Authority. After this, the business needs to get the Occupancy permit and finish the registration of the company.
Hungary is also in the bottom 50 countries in the world when it comes to ease of electrical connection. It can take 252 days to complete the entire process.
The country offers cheap trading across borders; however, the procedure can take a long while. Exporting goods can take an average of 17 days and importing goods can take an average of 19 days.
Opportunities in Various Business Sectors in Hungary
Hungary is currently focused on key business sectors, including agriculture, automotive, electronics and ICT, tourism, healthcare, and technology, which have shown to have a lot of impact on its economy.
About 70% of the total land area in Hungary is available for agriculture, while 40% is arable. Prior to its political and economic transition, agriculture accounted for about 17% of the GDP and 22% of the total food exports. Today, agriculture accounts for just 3.3% of the GDP and 7% of the export. Despite the reduction, the Hungarian agriculture sector remains self-sufficient, and export focused.
The country is a leading producer of poppy seeds and the second large producer of foie gras. It also exports wheat, corn, potato, sugar beet, sunflowers, and various fruits. It has several wine countries which produce famous wines and has 33,000 farmers engaged in animal husbandry.
Hungary is one of the preferred destinations for investment in the automotive industry. Major car manufacturers have their plants in Hungary, including General Motors, Suzuki, Mercedes-Benz, Audi, and Opel.
There are 350 car component manufacturing companies in the country that employ over 100,000 people.
The electronics industry accounts for about 22% of Hungary’s manufacturing production. As the largest electronic manufacturer in Central Europe, the country is responsible for 26% of the region’s electronics manufacturing and directly employs 115,000 people in the industry.
The ICT sector consists of IT, hardware, software, and telecommunication services and is responsible for 10% of the GDP and employs 100,000 people. Today, the country is the leading manufacturer of communication tools and computer assembly.
Hungary is one of the hottest travel destinations in the world. The tourism sector employs over 150,000 people directly as well as offers indirect jobs related to the media industry.
The country is home to the breathtaking Lake Balton, which brings in one million tourists annually. Budapest is the most visited region in the country, bringing in 3 million tourists each year.
The country has a well-established and solid healthcare system that is run by the National Healthcare Fund. Pharmaceutical businesses thrive in the country and offer significant contributions to the economy.
As far as technology and AI (artificial intelligence) is concerned, the government is placing significant focus on the ICT sector since the COVID-19 pandemic accelerated the digital transformation momentum in both the private and public sectors.
Currently, software development in Hungary contributes a growing portion to Hungary’s economy and represents about 6% of the total GDP. The country also outsources many IT services within the region with over 80,100 specialists employed in the IT sector.
The country has also implemented IT-friendly policies like offering financial support, assistance, and incentives for R&D that have helped the country bring in multinational tech companies like Microsoft, Nokia, Deloitte, Siemens, TATA, and more that have built their research centers in the country. The country is now seeking to bring IT-related growth to the healthcare, banking, and transportation sector.
The IT spending is expected to grow at 2% throughout 2022 and is driven mostly by increased spending in the public sector.
The hardware sector is expected to be flat through 2023; however, systems integration is forecasted to grow at 2% through 2022 and software at almost 7%. As for artificial intelligence, Hungary has a vision to benefit from the opportunities provided by AI. The country has already established a National AI Laboratory and partnered with Finnish projects to provide 1 million people with basic AI knowledge through several training courses.
According to Innovation Minister Palkovics, artificial intelligence is expected to contribute 11-14% of Hungary’s GDP by 2030.
Keeping in mind these variations in growth rates in different technology sectors, the Hungarian market offers opportunities in new technology including cyber security, fintech, digitization, machine learning, business acceleration, artificial intelligence, and Industry 4.0 enablement.
The beautiful panorama over the Danube in Budapest
Outsourcing and Nearshoring Opportunities in Hungary
Although most companies that opt for outsourcing do so to cut costs, finding the perfect location for offshoring is a complex process. Businesses need to find out if the country offers a talented and skilled labor force, has a language barrier and a compatible culture, has expertise in the back office or service sector, business security and intellectual property regulation, and of course, results in cost savings.
Hungary ranks high in all of these aspects. When it comes to cost-cutting, although Hungary may not be able to compete with countries like India in terms of labor cost, it does very well in comparison to Western Europe, the United States, and Canada.
The minimum wage for skilled labor is 732 euros per month and labor productivity is very high in the Central Europe region. Budapest and other university cities have resulted in a new and highly educated generation of Hungarians that are contributing groundbreaking research and innovation to the fields of science and technology. In addition, multinational companies also report that Hungarians are eager to learn and quick to understand.
As such, the country is an offshoring haven for foreign businesses looking for affordable, young, and talented workforce.
In fact, for European countries and particularly Western Europe, it makes more sense to look closer to home when considering outsourcing. Hungary is only within a 2-hour flight of Europe’s major metropolis and capitals and a gateway between Western Europe and the fast-developing economic market in Eastern Europe.
A growing labor shortage in many CEE countries has resulted in Hungary being targeted for nearshoring, which is responsible for the country having the highest share of outsourced IT services in the region.
In recent years, Hungary has seen an influx of significant foreign direct investment, which has encouraged it to rapidly adopt best business practices. Since 2004, when it became a part of the EU, Hungary has witnessed an increase in labor mobility and a stable tax, business, and legal environment.
The country has made heavy investments to build the largest, most extensive motorway network in the Central and Eastern Europe region, which has also resulted in easy access to the country by neighboring states. It has a very technologically aware population and a sophisticated telecommunications infrastructure.
Much of the economic activity is strongly centered around Budapest which has attracted two-third of FDI and one-third of the employed workforce. As such, dozens of companies have chosen to nearshore many of their operations to Hungary.
Opportunities for British Businesses in Hungary
A high-growth business hub, Hungary offers a liberal and modern business environment that offers various opportunities for British companies to set up shop.
Hungary’s economy has become quite liberal, thanks to the injection of FDIs, privatization, and the introduction of commercial laws. The country has a DB rank of 52 and a score of 73.4. The culture of Hungary is similar to the United Kingdom’s, and English is widely spoken, so British companies may find it easy to work with local businesses and partners.
Because of its strategic geographical region, Hungary is a perfect business hub for British companies to expand their footprint in Central and Eastern Europe — the country is a nexus to three major trade pathways. As such, many businesses from across the world have selected Hungary to be their regional center or global office.
The country also has a high rate of education and offers a highly skilled and educated workforce. This makes it particularly advantageous for UK businesses who want to set up shop in the country and need local staff.
UK businesses can reap various opportunities across various sectors, particularly energy and life sciences. The country’s clean energy, renewable energy, and nuclear sector can benefit UK companies. There are also many opportunities in electrical machinery and equipment production. The life science sector also offers opportunities in research and development and supply chain-related services.
Made-in-UK products have a very good reputation in Hungary, particularly when it comes to medical equipment and healthcare. The country imports most of the equipment needed to run its strong healthcare sector, which creates various opportunities for British businesses to offer high-quality products at competitive pricing.
There are a significant number of small and medium biotechnology companies in Hungary, which are showing steady growth. This offers excellent collaboration opportunities to British biotech firms with Hungarian ones.
Setting Up a Foreign Business in Hungary
To set up a Hungarian company, businesses need to register it with the Hungarian Court of Registration. As we mentioned before, the registration process will be represented by a lawyer who will prepare and countersign all corporate paperwork and file the application electronically for registration.
Foreign investors do not have to come to Hungary to sign the relevant documentation. This can be done aboard as well, though the presence of a signatory will be needed to open a bank account of the company.
The business registration process is not too complicated and follows the steps below:
The investor will need to decide the company’s name, management, registered office, type and amount of share capital, a person of delivery agent, etc.
The lawyer will then prepare your relevant documents, which will include the articles of association and statutory declarations.
The corporate documents will need to be signed in front of the Hungarian lawyer or abroad. If signed abroad, notarization or super legalization by the Hungarian embassy certification consular or Apostille will be necessary.
Your presence will be required to open a business bank account in Hungary, where the share capital will be placed.
The Hungarian lawyer will file the executed and countersigned documents and electronically apply for the company’s registration.
The company will be registered by the Court of Registration that will provide the company with the VAT number and statistical number.
The companies will be able to start their business operations as soon as the filing is done, with some restrictions. The registration process will take about 1 to 2 days from the date of the filing.
Businesses can also apply for expedited registration, which may be completed in a week; however, you will need to prepare the articles of associations based on a template without making any additions or deletions.
Registering a general partnership, the limited liability company, and a limited partnership does not require any fee. To register a private company, you will need to pay a duty fee of HUF 100,000 and HUF 50,000 for registering a branch office. Additional charges like statutory publication fees, legalization, translation, and courier fees will also apply.
Outlook for 2023 And Beyond for Companies Doing Business in Hungary
The economy of Hungary continued to grow rapidly in the first half of 2022 due to the strong fiscal stimulus injected by the government, which resulted in higher consumption and more investment in the public sector. In addition to higher employment rate and income growth, household income was also boosted by one-time income tax rebates and pension and public wage increases during the year.
In the coming years, the labor market will continue to show signs of improvement. In the meanwhile, the high wage growth and currency depreciation may lead to higher inflation as well.
Industries are expected to continue to recover. Industrial production and exports exceeded the pre-pandemic level, resulting in increased business confidence. The labor market has also improved, showing an increase in the employment rate.
Some risks that businesses may continue to encounter are supply chain problems, which can delay the export of goods. On the flip side, a quick recovery is expected from major trading partners in Europe, which can result in growth, considering Hungary’s focus on exports.
If supply chain constraints continue or recovery remains slow due to unforeseen circumstances, it would be worthwhile for Hungary’s government to keep their focus on maintaining its supportive fiscal policies and aid in the rest of 2022 and beyond. Labor taxes can be further reduced by cracking down on tax evasions, broadening the consumption taxes base, or increasing environmental taxes.
Enabling of key sectors such as Hospitality, Tourism, Technology and Innovation, and several other key industries will continue to be a rise, with Hungary becoming one of the hottest hubs for EU regional and global interconnections.
Creating strategies to decarbonize the economy to meet environmental goals would be another priority. In addition, structural reforms are also needed to increase labor force participation and enhance productivity to improve the potential for growth.
Where to Get Help to Do Business in Hungary?
If you are interested in starting a business in Hungary, you need to get the right information. The Hungarian British Business Alliance and the Institute of Directors can offer assistance to companies seeking to expand their businesses in Hungary. The platforms allow investors to become a part of the community and grow their business by gaining access to tools and resources like information, education, and high-profile networking opportunities in Hungary, the UK, and Central European countries.
Here are how these resources can help businesses:
Consultancy: Offer expert guidance and consultancy services on a variety of business-related topics.
Business Promotion: Offer word-of-mouth, referrals, and members-only events to help SMEs and established businesses grow.
Networking: Offer opportunities to meet with the big names in the industry and form partnerships that can lead to growth.
Workshops: Offer masterclasses, seminars, and workshops on a variety of business, legal, economic, and political matters.
Embassy Access: Provide you access to the Hungarian Embassy in London during classes and presentations.
Susanna Toth, Chairwoman of HBBA
Paul Steven, Economic Advisor of HBBA
About the authors
Susanna Toth is the Founder & Chairwoman of the Hungarian British Business Alliance, and Founder MD of H-Net Global, where she helps businesses set up, expand, and invest in the UK and Oversees, whilst enabling international trade and business development consultancy network via boutique agency work.
Steven Paul is the Economic Advisor to the Hungarian British Business Alliance and MD of Kirra Advisory, where he works with businesses, c-level executives, and boards across sectors to build, launch, expand and transform businesses on their strategic, business and leadership agenda locally and internationally. Steven is also a Chartered Director and brings excellence to the Boardroom of businesses.
Written by Erika dr Szita-Szegedi.
HBBA Legal Advisor, CEO, ST Consultancy
We all know how big an impact Brexit was, and it fundamentally changed trading inside and outside the United Kingdom and also changed trading between the European Union and the United Kingdom.
In a nutshell, I’d say: its tons of paperwork and extra costs.
So how can we do it right?
Brexit affected so many areas of UK and EU economies: reduced investment, recession, manpower issues and increased trading costs. The legal consequences were massive as EU legislation applied to the UK on 31 December 2020, became part of UK domestic legislation under the control of the UK’s Parliament. From the 1st of January 2021, UK Companies are no longer able to take advantage of the EU cross border merger regime. This basically means every export above the value of £135 from the outside UK attracts VAT. For shipments with a value of £0-£135 when being sold by businesses to consumers in the UK, VAT is collected at the point of sale and will therefore be the seller’s responsibility.
In the EU, to be able to export into the UK, you will need a couple of things before you start exporting:
Export licence: An export license is a document issued by government bodies allowing registered companies or individuals to legally ship goods that are otherwise restricted.
EORI number: It needs to be started with GB.
Custom declarations: Exact details about your shipment.
Commodity Code: Required to lodge customs declarations and to find out if there are any restrictions that apply to the goods and what the import costs are. This determines customs duties and the other charges levied on the goods plus the preferential treatments that may apply to their import, restrictions and prohibitions that apply to the import-export and transit of specified goods. So be sure to use the correct commodity code so that you can set the right price for your products and avoid any back taxes.
Golden rules you should follow to make your business successful:
First of all, get your business ready to import or export and be sure you have all documentation and licences required. Always calculate export/import deliveries using a wide time scale to allow for delays. You can save a lot of money by planning ahead of time, because well-planned shipping can be significantly cheaper! Never forget that trading is a full-time job. You have to monitor your shipment in every possible way. Use technology as an aide on your side because knowing your shipment is stuck in customs clearance immediately helps you to keep your client informed and shipment date. Provide the authorities with required information as quickly as it possible.
It is important to note that protecting your trading capital is not synonymous with never experiencing a loss of trade. All traders have lost trade, but protecting capital entails not taking unnecessary risks and doing everything you can to preserve your trading business. Be a student of the markets every day as everything has an impact on trading markets: world politics, news events, economic trends or even the weather, keep yourself up to date!
Never risk more than you can lose, be sure the money in the trading account is expendable. Losing money is traumatic enough, but even more so if the capital shouldn’t have been put at risk in the first place and your solvency is at risk.
You should know when you need to stop trading, but also keep in your mind to accept wins and losses. Setting realistic plans and goals is an essential part of keeping trading in perspective.
Understanding the importance of each of these trading rules, and how they work together can help a trader establish a viable trading business. Trading is really hard work with so many legal and financial rules to follow. Traders who have the discipline and patience to follow these rules can increase their odds of success in a very competitive arena.
“Cars that have sat un-started for months, maybe even without oil, don’t take kindly to an abrupt wake-up call. They can be as nasty as a grizzly bear prematurely jolted out of hibernation, and you will pay the price of its wrath.”
As we begin to recover from the effects of so called pandemic , which has not only locked down individuals but put many businesses into near hibernation, our thoughts have turned to getting life back to normal. The above quote gives some sound advice on how to treat your pride and joy classic car which has sat under covers for the winter, the rule is don’t just rip off the cover and turn the key! That makes me think about how we restart the engine of our businesses as we get back to some form of normality… Whatever that may be.
The words lockdown, social distancing, symptomatic, asymptomatic, positive, negative, isolating, quarantined, and furlough will soon be put to the back of our memory bank, as we resume our lives from a period which will hopefully never be experienced again. But getting back to normal won’t be easy, business is about culture and despite the often promoted hype about working from home, the fact is the structure and intimacy of business is what creates the “why”
The so called lockdown meant the daily commute was replaced by staying at home, a novelty and much needed rest for most people. A chance to walk the dog, read, take up yoga and find our spiritual self. A 14 hour day didn’t allow much time to reflect, or think. Initially everyone seemed to take the opportunity to just stop, for once slow down from the 24/7 always on, e-mail, social media, too busy being busy world we lived in. But now what?
The daily Zoom calls will dissipate(as will the share price) but we’ll always cherish joining our colleagues on camera, without the customary suits, but replaced by the worst array of novelty t-shirts ever seen ( especially IT people) hair disheveled as they peered into the camera from their bedroom with the customary well stocked book shelf behind them. Were they real? And did we ever realise so many people had dogs? I’ll miss people talking on mute, the background of San Francisco from a house in Luton, people wearing a fleece, and ending the call wondering what was the point, pretending I had another to go to just to excuse myself from the chaotic scene. Give me a room and a white board any day please.
I for one missed putting on a nice crisp shirt, getting in the car and driving with a purpose, rather than for a loaf of bread. The joy of a proper Italian coffee from that rather nice deli near the office is something we’ll never take for granted again. The chance to jump on a plane again is a novelty as though it were 1920, and I even missed the security screening at the airport… Well maybe not that!
So how do we get back to “normal”? What will the new normal even be? There are two ways this will go. In some of our businesses we’ve found remote working has actually increased efficiency, the multitude of tasks on the back burner have had the focus they deserved, the packed meeting calendar has given way to productive short punchy video calls, and generally people have taken this time to tidy things up. In a sense the true meaning of Agile working has been forced upon us, and it’s worked for some.
But on the other hand old habits die hard, there is much talk of things never being the same again, will we ever travel as much, why go to the office when working from home has worked so well? Did we really need all those long drawn out meetings with the requisite biscuits followed by a two hour commute?
We are creatures of habit though, give it a while and many of us will be back in the old routine as though none of this ever happened. We all promised ourselves there would be a new normal, but the memory fades and habits reform. Rather like the promise to never drink rose again the morning after the night before. Until the next barbecue on a sunny evening… How a business copes as the lights are turned back on will be a true test of leadership.
But beware, the engine won’t start first time, in fact as our car friend suggests it may be terminal to even try to turn the key without some proper thought. Business leaders need to have a plan for getting everyone back into work mode. Strategic plans will have been forgotten, customers neglected, relationships temporarily broken, Sales people out of practice. All of this needs careful attention if the return to optimum working effectiveness is to happen quickly, or it could take months.
We’ve had the green light to restart the engines, but make sure when you whip the covers off you’re very careful how you start that engine!
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