Agricultural business is going to be on the upswing

11.07.2013 — Analysis

The government of Russia allocated 600 million rubles to the Sverdlovsk Region to support small business.

The total amount earmarked by the Middle Ural government authorities for assistance to startup entrepreneurs in 2013 is estimated at 900 million rubles. Most of the funds will be channeled to development of the regional economic sector.

The Ministry of Economy of the Sverdlovsk Region states that the funds are allocated primarily for upgrading of manufacturing, financing costs of technical connection to utility systems and improvement of energy efficiency of production facilities. In the meantime, in the recent years non-financial instruments have been gaining increasing popularity in support of small business: marketing advice services, assistance in writing business plans, lectures of entrepreneurs having hands-on experience in business.

Elena Novotorzhentseva, the Deputy Minister of Economy of the Sverdlovsk Region, informed that the Regulations on Providing Budgetary Assistance to Small and Medium-Sized Business in 2013 was published on July 9. As in the previous years, the emphasis will be placed on the funds allotted in the form of grants and preferential loans, subsidies for repayment of interest, for financing lease payments and fees for participation in exhibitions, etc.

In addition, the authorities intend to provide financing to municipal foundations for small business support. In the province, as Yevgeni Kopelyan, the Executive Director of the Sverdlovsk Regional Small Business Support Foundation, says, the social projects are generally simple, but very important. Therefore, it was decided to support businesses dealing with folk crafts and arts, environmental and rural tourism. For the first time ever, subsidies will be given to day-care centers.

Special attention will be given to innovation business. The subsidies of this category will be allotted both to mature and to beginning entrepreneurs. The amount earmarked by the authorities for development of innovation business will total about 180 million rubles. The representatives of this sector of economy will be offered specially developed training programs and advisory services of practicing experts. The entrepreneurs say that this form of support is important, as it helps them to gain a foothold in the market.

Mikhail Kadochnikov, the Project Manager of Cybergroup NPO, LLC, told RusBusinessNews that he had listened to the marketing course taught by lecturers of the Higher School of Economics and business trainers having their own business. The training helped him to avoid repeating the mistakes that had been made at the outset of his business activities.

For some reason, Cybergroup that specializes in designing of vending machines decided to start with …condoms – and went belly up. After the thorough market research, the beginning entrepreneurs came to the conclusion that selling overshoes in medical institutions was much more profitable. The design development of slot machines for cash-to-metro token exchange was so successful that the company signed an 800-thousand-ruble-worth contract with the Nizhny Novgorod metro operator and reached break-even performance.

Cybergroup is a standard engineering company manufacturing small batches of ready-to-operate electronic products in accordance with the customer’s specifications. Components are purchased in other countries, programs are developed by the company employees and cards are made by the company’s partners. The company has only six employees, mostly, recent university graduates who need time to gain experience.

The grant received from the Regional Small Business Support Foundation helped to purchase the required industrial equipment and move to the solution of the more difficult task: the Nizhny Novgorod metro operator asked to redesign the token system of the automatic ticket gates into the card system. The project is quite novel in Russia and requires certain engineering expertise; therefore, there were not many companies that would want to tackle the problem. The small business from Ekaterinburg decided to take the risk. M. Kadochnikov points out that it would have been rather difficult for them to enter this challenging market but for the support from the government.

Yulia Klimova, the director of AtriA, LLC, is grateful to the Business Support Foundation for the provided opportunity to visit different exhibitions and participate in business missions of the Sverdlovsk Region to other countries. The polymer-based plastic products offered by her company are not manufactured anywhere within the post-Soviet territory; as a result the product is little-known and, therefore, it takes a lot of effort to promote it. Due to exhibitions and applied marketing taught by the experts of the foundation, AtriA was able not only to refuse from the financial supports from the government, but also to open its representative offices in other Russian cities.

According to the data from the Sverdlovsk Regional Small Business Support Foundation, from January to May 2013 the free-of-charge courses were attended by 1,867 people. Beginning entrepreneurs and young people as well as representatives of operating businesses listened to the course on the educational program "Development of Entities of Small and Medium-Sized Business in the Sverdlovsk Region".

The officials say that training of groups of entrepreneurs representing different sectors of economy is an efficient form of assistance to small and medium-sized business, which is essential for its active growth. According to E. Novotorzhentseva, the contribution of small businesses to the gross regional product has reached 40%. Two years ago it was only 33%.

Vladimir TERLETSKY