Everyone is talking about small businesses. In 1993, when it was allowed, more than 90,000 new firms were registered by individuals. Now, less than three years later, official figures show that only 40,000 of them still pay their dues and present annual financial statements. These firms are called "active" - but this is a misrepresentation. Only a very small fraction really does business and produces income.
Why this reversal? Why were people so enthusiastic to register companies - and then became too desperate to operate them?
Small businesses is more than a fashion or a buzzword. In the USA, only small businesses create new jobs. The big dinosaur firms (the "blue-chips") create negative employment - they fire people. This trend has a glitzy name: downsizing.
In Israel many small businesses became world class exporters and big companies in world terms. The same goes, to a lesser extent, in Britain and in Germany.
Virtually every Western country has a "Small Business Administration" (SBAs).
These agencies provide many valuable services to small businesses:
They help them organize funding for all their needs: infrastructure, capital goods (machinery and equipment), land, working capital, licence and patent fees and charges, etc.
The SBAs have access to government funds, to local venture capital funds, to international and multilateral investment sources, to the local banking community and to private investors. They act as capital brokers at a fraction of the costs that private brokers and organized markets charge.
They assist the entrepreneur in the preparation of business plans, feasibility studies, application forms, questionnaires - and any other thing which the new start-up venture might need to raise funds to finance its operations.
This saves the new business a lot of money. The costs of preparing such documents in the private sector amount to thousands of DM per document.
They reduce bureaucracy. They mediate between the small business and the various tentacles of this squid called The Government. They become the ONLY address which the new business should approach, a "One Stop Shop".
But why do new (usually small) businesses need special treatment and encouragement at all? And if they do need it - what are the best ways to provide them with this help?
A new businesses goes through phases in business cycle (very similar to the stages in human life).
The first phase - is the formation of an idea. A person - or a limited group of people join forces, centred around one exciting invention, process or service.
These crystallizing ideas have a few hallmarks:
They are oriented to fill the needs of a market niche (a small group of select consumers or customers) , or to provide an innovative solution to a problem which bothers many, or to create a market for a totally new product or service, or to provide a better solution to a problem which is solved in a non-efficient manner.
At this stage what the entrepreneurs need most is expertise. They need a marketing expert to tell them if their idea is marketable and viable. They need a financial expert to tell them if they can get funds in each phase of the business cycle - and wherefrom and also if the product or service can produce enough income to support the business, pay back debts and yield a profit to the investors. They need technical experts to tell them if the idea can or cannot be transformed to reality and what it requires by way of technology transfers, engineering skills, know-how, etc.
Once the idea has been shaped to its final form by the team of entrepreneurs and experts - the proper legal entity should be formed. A bewildering array of possibilities arises:
A partnership? A corporation - and if so a stock or a non-stock company? A research and development (RND) entity? A foreign company or a local entity? And so on.
This decision is of cardinal importance. It has enormous tax implications and in the near future of the firm it greatly influences the firm's ability to raise funds in the foreign capital markets. Thus, a lawyer must be consulted who knows both the local applicable laws and the foreign legislation in markets which could be relevant to the firm.
This costs a lot of money. One thing that entrepreneurs are in short supply of - is money. Free legal advice will be highly appreciated by them.
When the firm is properly legally established, registered with all the necessary authorities and has appointed an accounting firm - it can go on to tackle its main business: developing new products and services. At this stage the firm should adopt Western accounting standards and methodology. The Macedonian accounting system leaves too much room for creative playing with reserves and with amortization. No one in the West will give the firm credits or invest in it based on local financial statements.
A whole host of problems faces the new firm immediately upon its formation.
Good entrepreneurs do not necessarily make good managers. Management techniques are not a genetic heritage. They must be learnt and assimilated. Today's modern management includes many elements: manpower, finances, marketing, investing in the firm's future through the development of new products, services or even whole new business lines. That is quite a lot and very few people are properly trained to do the job successfully.
On top of that, markets do not always react the way entrepreneurs expect them to react. Markets are evolving creatures: they change, they develop, they disappear and re-appear. They are exceedingly hard to predict. The sales projections of the firm could prove to be unfounded. Its contingency funds can evaporate.
Sometimes it is better to create a product mix: manufacture well-recognized products which will sell well for sure - side by side with innovative products.
I gave you a brief - and by no way comprehensive - taste of what awaits the new business and its initiator. You see that a lot of money and effort are needed even in the first phases of creating a business.
How can the Government help?
It could set up an "Entrepreneur's One Stop Shop".
A person wishing to establish a new business will go to a government agency.
In one office, he will find the representatives of all the relevant government offices, authorities, agencies and municipalities. He will present his case and the business that he wishes to develop. In a matter of few weeks he will receive all the necessary permits and licences without having to go to each of the offices separately.
Having finalized the obtaining of licences and permits and the registration with all the appropriate authorities - the entrepreneur will move on to the next room in the same building. Here he will receive a list of all the sources of capital available to him both locally and from foreign sources. The terms and conditions of the financing will be specified near each and every sources. Example: EBRD - loans of up to 10 years - interest between 6.5% to 8% - grace period of up to 3 years - finances mainly industry, financial services, environmental projects, infrastructure and public services.
The entrepreneur will select the sources of funds most suitable for his needs - and proceed to the next room.
The next room will contain all the experts necessary to establish the business, get it going - and, most important, raise funds from both local and international institutions. For a symbolic sum they will prepare all the documents required by the financing institutions as per their instructions.
But entrepreneurs in Macedonia are still fearful and uninformed. They are intimidated by the complexity of the task facing them.
The solution is simple: a tutor or a mentor will be attached to each and every entrepreneur. This tutor will escort the entrepreneur from the first phase to the last.
He will be employed by the "One Stop Shop" and his role will be to ease life for the novice businessman. He will transform the person to a businessman.
And then they will wish the entrepreneur: "Bon Voyage" - and may the best ones win.
About The Author
Sam Vaknin is the author of "Malignant Self Love - Narcissism Revisited" and "After the Rain - How the West Lost the East". He is a columnist in "Central Europe Review", United Press International (UPI) and ebookweb.org and the editor of mental health and Central East Europe categories in The Open Directory, Suite101 and searcheurope.com. Until recently, he served as the Economic Advisor to the Government of Macedonia.
His web site: http://samvak.tripod.com
executive chauffeured services Bradford .. Madison to Airport carShould your business have a toll free number for customers... Read More
Business card size works well for invitations to special events.What... Read More
In the world today, many people are further in debt... Read More
Motivational author and speaker Jim Rohn says that for a... Read More
Starting the blind cleaning business is one of the best... Read More
In the book Women and Small Business author gives all... Read More
How do window cleaning franchise businesses start? It is a... Read More
One of the biggest fears people have about starting a... Read More
Why are Chambers a good launching pad?Chambers provide you with... Read More
Scenario OneDuring a recent presentation, a business owner was given... Read More
If you are a small business you know that you... Read More
What is the satisfaction & expectation review of the business... Read More
You've come up with the best idea since sliced bread,... Read More
Everyday more web based companies enter the business scene. The... Read More
Many small businesses do quite well due to the blood,... Read More
You've heard it before; we're living in an information age.... Read More
People will always stress that having a well researched business... Read More
For really tough boat hull cleaning you will need to... Read More
In the first article we mentioned the main characteristics that... Read More
What does buying a fat pig have to do with... Read More
Nothing can drive a business down faster than customers who... Read More
Over the years I heard the best way to learn... Read More
Have Some Time to Yourself One of the most important... Read More
Everyone wants to succeed in life. Most people want to... Read More
After over thirty years advising small business it still comes... Read More
O'Hare Chicago prom limo ..Are you -- like 70 percent of small business owners... Read More
If you interviewed business owners of failed businesses, a majority... Read More
Did you ever have one of those days or weeks... Read More
Treat your business as a serious, full-time business and be... Read More
We have all seen the mobile washing units cruising our... Read More
What image do you and your people portray to your... Read More
You are probably hard at work promoting your business (and... Read More
Yes, that IS security when nobody can downsize you because... Read More
Security Professionals provide the products and services necessary to create... Read More
During the California Recall Election, I was very interested. Without... Read More
According to the American Society for Aesthetic Plastic Surgery, since... Read More
Do you have a Business Plan? Congratulations, but you are... Read More
Attorneys and Lawyers are ruining the franchise industry. It is... Read More
If you own a mobile service or home based franchise... Read More
Here are a few tips on how to hand out... Read More
The story is told of a tiger chasing some goats... Read More
If you're organized, smart, capable and willing to work with... Read More
You've heard it before; we're living in an information age.... Read More
Why should you always maintain a good report with a... Read More
Cash is the lifeblood of any business. As humans need... Read More
When it comes to cost, how much can you afford... Read More
Many ventures are faced with the challenging task of raising... Read More
North County San Diego has had some significant growth, and... Read More
Should your business have a toll free number for customers... Read More
So it's time to invest some finances into advertising your... Read More
Small Business |