The economy of the Russian Federation is often called a transition, so that the financial sector is in the process of transition to a market economy. One of the factors of successful development is small business. It is this segment that determines such important indicators for the country as stability and growth rates.
Entrepreneurship in the aggregate affects the development of new forms of sectors of the economy. But, unfortunately, the share of small business in Russia's GDP is only a quarter of the total. In countries with more developed economies, this number exceeds the fifty percent mark.
The topic of small business development in Russia is very relevant at the moment, because there are problems that hinder this promising area of activity.
Sector benefits
The state of small business in Russia leaves much to be desired. Moreover, it is the enterprises in this sector that have the following positive features:
- Small businesses in Russia contribute to more jobs. Moreover, the employed contingent is quite extensive. Specific working conditions make it possible to hire elderly citizens, students, housewives and people with disabilities. Today, only a quarter of the human resources of the Russian Federation are involved in enterprises in this sector. The optimal situation would be the value of this indicator, twice the current.
- Unlike large giants, the production of such enterprises is easier to reorient to other products. This will bring less costs, although small businesses are more prone to fluctuations and leaps in times of crisis and economic instability.
- Simplified organization and management system. Management in case of unforeseen circumstances is able to make flexible and operational decisions.
- Small businesses are realizing the opportunity to bring live income to the country's budget during the destabilization of the local currency.
- Joint cooperation with large industrial facilities allows us to conduct activities for the benefit of both parties. All types of small business in Russia, in cooperation with old enterprises, can bring them to a new level.
- Entrepreneurship requires less initial investment.
- Small business is focused on the needs and opportunities of the regional market.
Small Business Development History
Small business problems in Russia existed at various stages of its formation. There are three stages in the historical development of this sphere.
This type of business takes count from the moment of the collapse of the Soviet Union. The transition period lasted for five years, during which there was an active formation of small and medium-sized businesses.
Moving to the second stage of its development, this sector has undergone some changes. There was competition, the market began to become saturated. Two years of this stage were characterized by the structural design of the industry.
Starting from the ninety-eighth year, the modernization of production processes has become a distinctive feature of the small business sphere.
In the late eighties, the idea arose to organize a small business from scratch. Ideas were nipped in the bud by the type of economy itself. The economy was planned, since it was not possible to bring in anything new. All official ideas were forced.Company managers were not interested in the development of industrial facilities subordinate to them. They did not have freedom of choice, leverage, or economic decisions. The initiative of the workers was also at zero. It was not possible to choose raw materials, suppliers and sales sources. This very constrained the movement, not giving intensive growth.
The problems of small business development in Russia were obvious. Such a policy led to a deterioration in the quality of products, low labor productivity. In the absence of the introduction of any innovative technologies, the situation only worsened. This ultimately affected consumers. The finished product market did not provide a wide selection of assortment. There was no competition, and this did not stimulate manufacturers to grow and improve.
According to authorities who did not see the problems, centralized management was supposed to contribute to the formation of a single production complex. He, in turn, had to ensure the uniform and balanced development of all sectors of the economy. But against the background of constant disagreements and contradictions, this idea could not be achieved.
The first stage of formation
Problems and prospects of small business in Russia became the subject of much debate in the era of perestroika. Since the country's financial sector during this period was in a crisis situation, cardinal decisions were required. A number of reforms carried out showed that the state economy is in a transitional state between the planned and market ones.
Management at the highest level was engaged in the implementation of changes in public relations. One of the features was a certain relaxation of the current regime. This was expressed in publicity and publicity. Such changes have led to the emergence of new forms of management, in particular small business. Support for small businesses was expressed in the adoption of laws enshrining provisions on individual labor activity and the organization of small enterprises.
A separate impetus to the development of this sector was given by the organization of scientific and technical centers, creative teams and relevant brigade contracts. We can say that the emotional and psychological ground was prepared for the formation of this sphere.
The beginning of the nineties was marked for small business by the fact that it acquired the character of a mass movement. The number of new entrepreneurs was growing rapidly. This has provided diversity in the consumer goods market. Most people did not have experience in this area. Everyone studied by trial and error, acquiring skills for successful business. Someone got burned out, others - accumulated decent capital.
This period is characterized by a push in the development of rental relations. Reforms included small privatization, which provided fertile ground for small businesses.
In the first two years after the collapse of the USSR, there was simply a boom in the business sector. About two hundred thousand enterprises were created and registered. This was facilitated by the regulatory framework, which was adopted by the authorities at that time. Many laws were very loyal, which could not but attract young businessmen.
The end of this phase is marked by mass privatization. Examples of small business in Russia were found in every sector of the national economy. This is catering, and trade, and light industry. A separate niche was occupied by service companies. Structuring and division of enterprises into levels depending on certain criteria. These include the number of employees, the volume of products and the value of working capital.
The second stage of entrepreneurship
Due to the fact that by 1995 more than half of private enterprises entered the sphere of small business, the authorities had to deliberately develop appropriate legislation.
A distinctive feature of this stage is that the sector has become overgrown with service companies. These are proposals in the field of consulting, law, education, information technology and finance.
There was stabilization in the development of the industry. The market was saturated, and business growth declined. The dynamics were very slow, but their character was positive.
The third stage of development of small business in Russia
The new millennium brought to the surface all the problems of small business in Russia. And over the short period of existence of their sphere, quite a lot has accumulated. The development dynamics turned from positive to negative. By 2003, there were about eighty thousand small businesses. But for a market economy, they should be tens of times more.
People understood that not the most profitable small business in Russia is individual enterprises, which are characterized by management within the family. They had no prospects, and crisis phenomena were observed in this area.
After the situation stabilized a little and the number of enterprises began to grow. The number of jobs, manufactured goods and provided services is increasing. However, to this day there are fluctuations in this sector.
Influencing Factors
The risks due to which problems arise in small and medium-sized businesses in Russia are of a different nature. Depending on the source of influence, they can be divided into two categories:
- factors of internal influence;
- factors of external influence.
The first group of risks is characterized by a combination of such features that determine the vital activity within the company.
The second group of risks is due to the prospects of this industry. This includes those factors whose changes in values lead to problems in doing business.
External environment
This component of the business is important for its development. It simultaneously creates both all the necessary conditions for carrying out entrepreneurial activity and problems. Environmental factors are understood to mean the opportunities and threats that it can carry.
First of all, suppliers fall into this category as sources of resources. Equally important are customers as a source of sales. After all, it is the final consumers that are the main indicator of the success of entrepreneurial activity. The strategy and nature of the methods chosen to achieve the set goals exert its influence.
All this large category of environmental factors is divided into two groups. The first is opportunities and prospects for further development, the second is threats and risks that cause inhibitory or oppressive actions and lead to forced liquidation. The company's policy should be aimed at maximizing the benefits of the current situation and minimizing the impact of threats.
The first problem is that a person is very at risk starting a small business from scratch. Ideas can be suppressed by the political and social situation, the situation in this industry. In addition to the common problems that are characteristic of enterprises of any level, both large industrial facilities and small firms, there are risks associated directly with the size of the enterprise.
The main overwhelming factor for organizations of this size is instability to market fluctuations. If the giant is confident that it will stay afloat, then small business is in question. That is, any force majeure circumstances may simply leave no chance of survival.
The second problem is the uncertainty of state financial institutions that control the small business sector.This is due to the fact that most of the objects in this sphere have a not very wide market. This environment is characterized by a high degree of flexibility and variability, which businessmen cannot always adapt to and adapt to.
Internal environment
The problems of small business in Russia are largely due not only to external opportunities and threats, but also to the situation within the company. The success of the business is due to the way in which priorities will be set in the work, the personnel are appointed and the responsibilities and obligations are distributed between them. An important is the marketing program and competent financial policy.
Industry issues
At the moment, the main problems that have a significant impact on small businesses are:
- Lack of qualified personnel. Today it is quite difficult to find true professionals in their field. First, most often this work rests with the leaders themselves, who, relying only on their own preferences and requirements, form a team. Only twenty percent of small businesses are provided with competent workers.
- The tax burden. An improperly constructed system of penalties takes away a huge percentage of the profits of enterprises. Many simply can not afford the deductions to the state budget because of what they are forced to conduct "black bookkeeping" or simply declare bankruptcy.
- Hard credit system. Significant financial resources are required for start-up capital or for project implementation, which are most often borrowed at high interest rates in the respective institutions. But the longer they are involved, the less chance that the bank will issue such an amount.
- Depriving their employees of a social package of services. This is also due to excessively high taxes, which leads to the payment of "salaries in envelopes."
- Difficulties in buying or renting land and premises. And also in the absence of access to infrastructure facilities. The established high electricity tariffs leave enterprises without energy.
- Corruption and robbery by officials. Frequent and unreasonable checks, fines and the lack of organized administration force even law-abiding citizens to act by appropriate methods.
- Low level of solvency of the population. That segment of the population, which is the main target audience, is simply not able to pay the set price. All costs are invested in the final price, and entrepreneurs simply cannot work at a loss.
Specific Features of Small Business in the Russian Federation
Small business problems in Russia have a number of their specific features. For example, in some regions, such as Siberia, there is no transport infrastructure. This makes it impossible to transport raw materials and marketing finished products. Similar regions of the Russian Federation are characterized by late receipt of information. The competence and objectivity of officials also leaves much to be desired.
In terms of the difficulties associated with lending, taxation and leasing, the government has placed small business facilities on a par with large industrial giants. This is by no means permissible.
This situation has led to a reduction in the number of enterprises in various sectors of the economy. Most often, such organizations have a trade, procurement and intermediary direction. Although they position themselves as diverse, providing a huge range of services and releasing many products, in fact they are narrow-profile.
Unlike other countries, support for small business in Russia does not have any educational character. It is the incompetence of managers and staff that often lead to collapse.In countries that pay more attention to this sector, special programs have been created within the framework of which business trainings are held for everyone.
Prospects for further development
The state understands that this sector is important. That is why the government supports this sphere to a certain extent. Indeed, without small business, irreparable changes will occur that will be expressed in worsening social conditions. This will certainly lead to even greater stratification in society. The people will be divided into two sectors - the elite and poverty. There will be discrimination. The government will no longer control the pricing process.
In connection with such threats, the government is implementing a state program under which a series of global reforms will be carried out. At the legislative level, this will be expressed in the effect on the taxation of small businesses in Russia. It must be reasonable and appropriate.
It is planned to increase the number of small businesses by two million over the next two years. Particularly favorable conditions await those businessmen who plan to start their own business related to the release of essential goods. The sphere of providing technical services is also promising. For this, lending to small and medium-sized businesses in Russia is simplified. The state also provides for the provision of benefits and subsidies. The possibility of business training on a free basis is being considered.