Ninčević-Lesandrić: Believe it or not, Croatian law does not distinguish between a novice entrepreneur and a startup

Member of Parliament Ivana Ninčević-Lesandrić from Most frequently raises questions about entrepreneurs, their rights and obligations in the Croatian Parliament, and is now preparing a legislative proposal to define the terms novice entrepreneur and startup company, as these two concepts have not yet been legally defined.

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“In a month or two, I hope this law will be ready for parliamentary procedure; we are working on it at full speed. I believe it is really time to introduce the much-discussed term novice entrepreneur and startup company into Croatian legislation, so that, finally, these two terms, which do not have the same meaning, receive the legal place and definitions they deserve.

Namely, Croatian legislation, believe it or not, does not recognize the term novice entrepreneur, nor startup companies. Therefore, the moment you establish a company as a novice and want to use subsidies and/or other incentives based on the fact that you are a novice entrepreneur, you depend on the will and disposition of the body or person who wrote the call for novice entrepreneurs,” emphasizes representative Lesandrić.

A novice entrepreneur means something different to everyone She explains how a novice entrepreneur may encounter different regulations, depending on whom they address.

“If an entrepreneur wants to use an HBOR loan for novices, they encounter the sentence: ‘Novices are also considered cooperatives and small and medium-sized entrepreneurs who have been operating for less than two years.’ However, if they want HAMAG BICRO services, an EU measure, the novice will encounter the following: ‘HAMAG-BICRO issues guarantees to cover part of the principal of loans to small economy entities that have been operating for up to 5 years.’ If they want to obtain non-repayable funds, there is no end to the imagination, so a novice entrepreneur can be in that status for up to two years of operation, up to three, and in some cases even up to five years. The novice phase does not depend on anything else but on the disposition of the person who has classified you into a group you may belong to, or may not,” explains Ninčević-Lesandrić.

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She emphasizes that she personally contacts numerous entrepreneurs who, in the calls of various local government units, realized that they themselves define what a novice entrepreneur is for them, and in doing so, they did not consult any entrepreneurs nor determine how long the time frame should be for the status of a novice entrepreneur.

Lumping together

“After detecting the problems of novice entrepreneurs, the issue of startups comes next, which in political dialogue is the same as a novice entrepreneur. And that is really not the same! A novice entrepreneur does not have to be the same as a startup, because an entrepreneur with over 20 years of entrepreneurial experience can certainly have a startup. Not all newly opened companies are startups. For a startup, I would adopt someone else’s, but the closest definition, which is ‘a company designed for rapid growth.’ It is not just a company that grows quickly, but a company that explicitly commits to rapid growth. Such a commitment makes a big difference because it emphasizes a special way of thinking and intention,” says the representative.

She explains how she distinguishes startups from small and medium enterprises (SMEs) based on intention, function, and financing, and that they usually operate in markets for selling known products to known customers.

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“There is a significant difference between startups and small and medium enterprises in the very approach to the market, as startups aim to become large and expanded companies that will have an impact on existing markets or focus on creating new markets. On the other hand, an entrepreneur, whether small or medium, is focused on their own company to achieve a secure and stable position in the existing market. Therefore, they also differ in profit realization. They have different goals for profit and growth potential. Small entrepreneurship in our country accounts for more than 90 percent of the total number of entrepreneurs, and I believe it is high time we dedicated ourselves to them accordingly,” claims Ninčević-Lesandrić.

She emphasizes that small entrepreneurs contribute 33 percent to the total GDP share, but, unlike the share of large and medium enterprises, the significance of small entrepreneurs for the Croatian economy is exceptional and crucial. She notes that we are currently witnessing all the serious challenges faced by the Croatian economic system when there are serious disruptions in business in conglomerates like Agrokor.