In which sector is it best to start a business and what simplifications can be expected in the legislation?
– What are the reasons for the quantitative losses in the business environment? How sensitive is this for the regional budget?
N.S.:
– There is some reduction in the number of small businesses, and the main reason, of course, is economic factors: a decrease in consumer demand, a weakening of the Belarusian ruble exchange rate, difficulties in foreign markets, primarily in Russia, and strict requirements for participants in the Customs Union. However, the situation is not critical.
The contribution of business to the production of goods and services, industrial production, sales revenue, fixed capital investment, wholesale trade, exports, and gross value added is gradually growing.
Its share in budget formation is increasing: in 2016, 21.7% of the total tax revenues of the region came from private businesses. For comparison, in 2014, it was only 15.5%, and in 2015 – 21.3%. In terms of receipts per taxpayer – a small or medium-sized business entity – the region ranks third after Minsk and the Minsk region.
In other words, in the context of crisis phenomena, there is a "self-purification" of the business environment, and the most effective, in-demand, and dynamic entities survive.
A.T.:
– The number of private structures is also decreasing due to low investment activity and the high cost of credit resources. Small businesses have been severely affected by the development of large retail chains, which, in conditions of falling demand, can
to undercut prices through large wholesale. And more than 50% of individual entrepreneurs are employed in trade.– The number of individual entrepreneurs in the region has decreased by almost 2 thousand. What do you think, did these people find themselves without work or are they working illegally? After all, even if there are no incomes, monthly payments to the FZSN must be made…
N. S.:
– It is possible that someone had to look for a new job, retrain, but these are the laws of the market. Individual entrepreneurs are the most mobile in this regard. No demand – they close, there is demand – they open. A significant portion of entrepreneurs have become employees due to the consolidation of business, some may also be working illegally at their own risk, but it is clear that in such a case, there can be no talk of any development. The future belongs to civilized trade and services. Competition is too high.
As for payments to the FSZN, the problem really exists, and the issue is being raised at the level of the Ministry of Economy. Not everything is simple here, as the Fund's revenue is very important for payments to current pensioners.
– It is obvious that significant liberalization of business conditions is expected in the near future. What difficulties do entrepreneurs most often face today?
A. T.:
– As for the tax burden, it is not that high. Moreover, each entrepreneur is free to choose a convenient and profitable taxation system for him. On average, taking into account payments to the FSZN, the tax burden on private economic entities is 37% of income, but for some it is no more than 13-15%. For comparison, in a number of developed countries, taxes reach 50% of income.
There are problems with a large number of administrative procedures and approvals, especially in construction, when creating new facilities. Large businesses suffer the most in this regard, of course. Often, the procedure for launching a new production is delayed for several years.
The draft of the corresponding decree of the President provides for a declarative principle for engaging in entrepreneurship, a significant simplification of certification procedures, and a moratorium on inspections by regulatory authorities.
Now sometimes
reaches absurdity: for example, at a car service station, to tighten a nut, you need certification for this type of work. You have to pay for everything, and someone will definitely come to check if you have the right tools. Why so many complications if it doesn't affect safety?N. S.:
– Simplification of sanitary and fire safety requirements is definitely necessary. Often, entrepreneurs don't even manage to open their businesses before inspectors arrive, imposing huge fines on legal entities, which kills the desire to continue working. I am convinced that novice entrepreneurs should be taught, not punished. After all, in reality, small and medium-sized businesses solve not so much the issue of budget revenue as they promote people's self-employment and make them independent.
– How do government bodies support private initiative?
N.S.:
– The problem is that many business entities, especially state-owned ones, are still learning to market themselves, although the process has moved off the ground. To survive and develop, today you need to "chase" the client, not the other way around. The budget finances entrepreneurial initiatives in three areas: support for small businesses, development of entrepreneurship support infrastructure, and information provision.
Large investment and entrepreneurship forums, trade fairs, and exhibitions have become regular events, and the "Entrepreneur of the Year" competition is very popular.
A.T.:
– Incubators and entrepreneurship centers are operating, and extensive informational work is being carried out. Last year, 144 free seminars were held in the Vitebsk region with visits to districts, attended by over 5,000 people. Businessmen are taught effective advertising and marketing strategies, product promotion via the internet, and much more. The small business incubator of the Vitebsk legal group "Law and Order" is effectively operating, hosting 160 business entities where almost a thousand people are employed.
– Tell us about the most interesting private business projects currently being implemented in the Vitebsk region.
– These areproduction of trade and warehouse equipment in the FEZ by the Belarusian-Dutch enterprise "Modern Expo". Unique equipment has been installed there, investments amount to about 13 million dollars, and it is planned to create more than 800 jobs. "Vitstroytekmash" is actively operating, producing cranes and mechanisms that have no analogues in Belarus and a number of CIS countries. The enterprise "Polymerkonstruktsiya" uses innovative technologies. The relatively young but successful "HappyStyle" has opened a chain of beauty salons. The enterprise "Novy Vek Spring" is engaged in the production of components for agricultural machinery. – What would you advise those who want to start their own business? In which areas of activity is it best to start? N.S.: – Communicating with established entrepreneurs, I am constantly amazed at how they feel the market situation, always keep their finger on the pulse. I think the main thing for beginners is business intuition, innate entrepreneurship. In addition, education in the broad sense of the word is needed, not just a diploma. The service sector, household services, car repair, and fitness and wellness are always in demand. Moreover, the conditions for doing business in these segments are likely to be simplified. Currently, a quarter of the region's business entities (legal entities and individual entrepreneurs) are engaged in trade, a fifth are in industry and the same amount in agriculture, 13% are in construction, and 8% provide services in transport and communications. A. T.: – Before starting anything, you need to calculate everything, understand the business you are undertaking well, and constantly learn. It's time to move away from the stereotype of a businessman of the 1990s – buy-sell. For example, if you have start-up capital, it is good to invest in production, especially with the creation of new jobs. This is, of course, a more risky activity, but it is supported by local authorities, inexpensive premises, preferential loans, and various preferences are provided. Just do not forget about possible risks.
Alexander KUTYNKO. Photos by the author and Dmitry OSIPOV, "Vitebskiye vesti".