Maintain your old Siemens Hipath system

Small Businesses - Big Obstacles

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

In The News:


Warning: simplexml_load_file() [function.simplexml-load-file]: http://feeds.skynews.com/feeds/rss/world.xml:1: parser error : Document is empty in /home/infob/public_html/includes/rss.php on line 2

Warning: Invalid argument supplied for foreach() in /home/infob/public_html/includes/rss.php on line 9


tikatoshop.it

Erfahrungen mit Pallhuber Wein
Agen Bola SBOBET Terpercaya

Travel in comfort and at your leisure with CT Airlink Limousine & Car Service for top quality private transportation and exceptional customer service. We operate Sedans, SUVs & Vans for CT Car Services to covering all Connecticut airports including Car Service from CT to Newark Airport , Mohegan Casino Uncasville CT, Foxwoods Casino Mashantucket CT, Manhattan Cruise Terminal NYC, Brooklyn Cruise Terminal NYC and Bayonne Cruise Terminal NJ. CT Airlink hire licensed and friendly chauffeurs who have in-depth knowledge of the Areas.

Creating a Paperless Office

When working from home, it is usual to find that... Read More

Small Business Vendors; Getting the Best Service

If you are a small business you know that you... Read More

Effectively Completing the Operations Plan Section of Your Business Plan

The Operations Plan is a critical component of any business... Read More

Where To Get Money For a Franchise Idea

How often have you thumbed through a business opportunity magazine,... Read More

Entrepreneurs Ask: What Can a Virtual Assistant Do For Me?

Great question!Freeing your time is an indisputably key element in... Read More

Due Dilegence 101 Or What You Do Not Know Can Kill You! - Part 1

Introduction: This article is written as a general discussion on... Read More

A Key to Success: Be Consistent

Over the years I heard the best way to learn... Read More

Why the Over Regulation on the Franchising Model?

Franchising is the fastest way to build small businesses, provide... Read More

Why Clean Mobile Homes for a Business?

Manufactured and Mobile Home owners know that the weather this... Read More

How Disabled Veterans Can Win Government Contracts

The Service-Disabled Veteran-Owned Small Businesses (SDVOSB) is a program that... Read More

Do You Make These 7 Deadly Cash Flow Mistakes?

Managing cash flow is every small business owner's most important... Read More

Reclaim Equipment Detailing Industry and NPDES, EPA, Storm Water Rules

It behooves every professional mobile auto detailer to stay up... Read More

1 Overlooked Key to Small Business Success

Is this you?You dreamed of owning your own business, doing... Read More

How to Use Graphs and Charts in Your Business Plan

Many people ask how many graphs or charts they should... Read More

Small Business and Over Regulation

Over regulation of small business is so intense it is... Read More

Seven Common Mistakes Made By Small Business Owners

Most new small businesses won't be in business this time... Read More

Competition Relations in Auto Detailing

There is significant competition in auto detailing and car washing.... Read More

How To Choose A Franchise

You'd like to go into business for yourself, and believe... Read More

Find Some Sample Payroll Check Stubs on the Net for Easy Reference

Starting a business? For many people, the bravery to venture... Read More

Pressure Washing of Paving Equipment and The EPA

Many pressure washing companies will be glad to take on... Read More

Todays Chef, Tomorrows Restaurateur -- Startup Tips by Restaurant Consultants Inc

Researching information for a recent business plan, I came across... Read More

How to Give FREE Advice and Make Money

When is advice free and when should you charge for... Read More

Franchises: How to Find the Best Franchise Opportunity for You

If you are looking for a franchise opportunity, the choice... Read More

Your Babys Ugly..and Youve Got Bad Breath

I've got good news and bad news. The good news... Read More

11 Things Small Business Owners Can Learn From The Supreme Court

1. Have A Strong Constitution ? Justices deliver decisions by... Read More