Family businesses on show
By Anton Romanenkov
Tit for tat
According to the Justice Ministry, over 250,000 individual entrepreneurs are registered in Belarus and, in the first half of 2011, their number rose by 23,000. Specialists say that this growth is the result of considerable simplification of registration procedures, reducing time needed.
Becoming an individual entrepreneur is a good way to ‘softly’ join business, since they enjoy relatively low taxes, simplified accounting and paperwork. However, they are limited in their development: individual entrepreneurs are forbidden to employ others except close relatives.
“We are pleased to observe a stronger business initiative among our population,” notes the Director of the Entrepreneurship Department at the Economy Ministry, Alexander Gruzdov. “Most Belarusian entrepreneurs are still working in the field of trade but, for economic development, it’s more important for them to show an active interest in the real sector, production and services.”
Lucky are those who are lucky
“It’s much easier now to register as an individual entrepreneur than it was several years ago,” says Minsker Sergey Kucheryavenko. “Moreover, we can gain advice easier, via special centres and business incubators.”
Mr. Kucheryavenko initially began his business with passenger transportation, later shifting to tourism and founding an enterprise. As an individual entrepreneur, he has been three times named ‘Best Entrepreneur of the Year’. Relying on his experience, Sergey advises beginner-businessmen to choose a sphere in which they are already experts. Moreover, customers’ needs and demands should not be neglected. “For example, transportation services are just one link in the complex of services I render. Each entrepreneur must be far-sighted,” he explains.
Mr. Kucheryavenko believes that Belarus could learn from Ukrainian experience, allowing each individual entrepreneur to employ several workers. This would generate new jobs, while increasing tax payments to the state budget.
“Individual entrepreneurship is a successful, democratic form,” believes BSU Professor Boris Panshin. “This is a family business, as well-developed in Italy, Germany and France, where families run breweries, cheese making plants, confectioneries and sewing parlours. These enable each generation to earn money.” With this in mind, Mr. Panshin believes Belarusian individual entrepreneurs have a future… but, primarily, regarding family businesses.
The official considers that further expansion of preferences for individual entrepreneurs could bring unfair competition. If they are allowed to have several employees, they’ll lower their costs (in comparison to legal entities), allowing them to sell their products and services at lower prices, thus ‘undermining’ small firms.
According to Mr. Panshin, the share of small and medium-sized businesses must rise in the future. However, this does not mean that large state enterprises have no future. “Rumours of large companies being divided into several smaller ones to improve efficiency are a myth,” he is convinced. “In the USA, there are a great number of small enterprises but large companies — such as Boeing — play a decisive role in the country’s economy.” Nevertheless, family businesses also have a future in Belarus, with the number due to rise several fold, alongside their taxes paid. It’s quite possible that, in the future, family businesses will produce 20-30 percent of the country’s GDP.
Since January 2009, the number of individual entrepreneurs in Belarus has risen from 216,000 to 232,000. Some time ago, Minsk accounted for about 20 percent of them but, now, the figure has reached 25 percent.