Goals and rationale underlying the establishment of Early Warning

Among the most important framework conditions for entrepreneurship and business development are the terms offered to entrepreneurs and company owners, who face an economic crisis.


Among the most important framework conditions for entrepreneurship and business development are the terms offered to entrepreneurs and company owners, who face an economic crisis.

The fear of going bankrupt and losing all is the most important single element preventing entrepreneurs starting at all and preventing or reducing willingness to develop their company.

Any activity to develop a company is done in order to increase values but it also contains risk of failing thus resulting in loss of values and possible bankruptcy.

The existence of an Early Warning mechanism means that entrepreneurs are assured that advice and support are available if their company ends up in difficulties. That results in more start-ups and more willingness to initiate growth initiatives.

Although difficult to measure, the social impact of giving support to entrepreneurs going bankrupt with unsurmountable debt is of great value, both seen in a national economic perspective and in a human perspective.
When you experience close contact with company owners in this situation, you realize that it is often the most difficult and challenging time in their life, having the potential to ruin not only their economy but to destroy their life.

Another factor of great importance is the insolvency laws and procedures applied in the country.

The following points are very important:

  • What are the conditions for obtaining debt relief if you as owner ends up with insurmountable debt?
  • What are the conditions and procedures for reconstruction of the company within court?

At the moment the two points mentioned above differ from country to country. A directive on insolvency is under preparation and is expected to harmonise and improve the above-mentioned conditions.

This manual is based on the structure of Early Warning Europe and draws on the experience of Early Warning Denmark, which has been operational since 2007. The establishment of Early Warning in Denmark was based on an examination of the above-mentioned viewpoints, and the Danish insolvency law was quite radically changed in 2006.

A figure showing the intentions by establishing Early Warning Denmark is shown below. It is important to mention that only about 50 percent of the cases are solved without ending up in court. This was why we very early in the project supplemented the original ideas idea of using voluntary advisors by building a close cooperation with very experienced insolvency lawyers.


In general, you will probably always experience that stakeholders, decision makers, ordinary people etc. are able to see that Early Warning is basically an excellent idea.  But it is really also sound business. In Denmark 3 statistical evaluations have been carried out.

Based on reduction in loss of tax and VAT the state has a surplus on running Early Warning.

You can read a paper about these evaluations here

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