In my home country (Romania) businesses evolved whenever a major social, political, technological, economical change occurred. Rather than steadily appearing after 1990 and presenting a constant increase in number, major Romanian business boomed whenever changes in the macroeconomic, political, technological, social, etc were made present. This is a normal evolution of a capitalist market, since every major shift opens new niches that can turn into successful business opportunities. So it was more important to catch the right wave rather than have the right skill.
I am not saying that a brilliant entrepreneur would not make a difference, but it was a lot easier to expand in a newly created sector and benefit from the first mover advantage rather than to enter in an already saturated sector. I would also want to point out that the companies that were in a particular market sector for a long period of time found ways to increase efficiency and become very competitive. This level of effectiveness certainly lags the one of the large western companies specialized in same activities (evidence for that being the fact we hardly have any firms that compete on a multinational level), but nevertheless surpasses in many cases any newly formed local company, regardless of who founds or manages it.
The ideal solution would have been to open a business in the past and expand as fast as possible. The present day niches become less frequent and the ability for one to take the start in such a race is almost impossible since it:
-requires huge capital (like recent business opportunities in the energy sector for creating Aeolian windmills - even if they require huge initial investment, they turn out to be very profitable if you find the right piece of land, since there are plenty of government subsidies and EU funding available)
-requires to know the information well in advance (Transelectrica, the Romanian institution responsible for allowing independent energy generating plants to connect to the National Energy Distribution grid was already saturated with applications that surpassed the grid acceptance potential even before the Aeolian Energy Projects were made public)
-may quickly become a battle ground where small, inexperienced and financial fragile entrants fight a loosing battle even from the beginning. New comers need to expand in niches that big companies operating in the same industry would find unattractive and without sufficient potential for them to allocate time and money.
Given that, several barriers are already set for the young, new entrepreneurs of today before they even consider starting a business. Even if they manage to come up with a great idea that bypasses all the above mentioned problems, they will still require a decent financial infusion into the start up. The Romanian system makes it hard for such companies to acquire that initial capital. You need to either come with some collateral or prove that you have a steady flow of cash, like a salary, or some sort of expertise in the field you want to open your business. But if you do not posses any of these guarantees that may allow the bank to trust you with the future repayment, and cannot find an alternative source of financing (family, friends, angels), then you find yourself stuck.
So there are a lot of barriers in today’s Romanian business world that became more stringent as time passed. There is little space for small businesses and in the case some decide to enter, they should be prepared for fierce competition. It is a market where size and financial power determines the winners. Good entrepreneurs may find it very hard to succeed without proper backing up. Their true value may be useful only after they manage to enter the game and secure a market segment without becoming a target for the big competitor’s.
References:
"Boom of the Aeolian Energy sector" http://business.rol.ro/content/view/69305/2/, last visited on 18 Sep 2008
"Entrepreneurial lessons" http://www.startups.ro/lectia-de-antreprenoriat
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3 comments:
man, you write a lot, and now i am dizzy from seeing so many white letters on the black background...
oki, i'm back..still dizzy though..you say Romanian start-ups need huge capital..well, what start-ups don't? And you get it, like in other places, from your own pocket, from a bank if you show you have a steady income or you bet with a collateral, or you find a rich German businessman who is willing to help you...anyways, what i think is of most importance in your country and one of the obstacles as well is that sometimes you have to have the right connections, cause without them sometimes even a good idea cannot be implemented. but of course if you have money, there are no more worries.
Of course businesses require huge capital, but you should also consider the average income of the citizens and the higher than usual costs required for setting up a Romanian business due to increased bureaucracy and corruption.
On one hand financing is more costly than in more developed countries and running the business will prove to be more difficult, but the good part is that competition is low (was low at least in 10 years ago), and most people lack the background of running a successful business because most of them had no educational training plus private firms were a newsence in the 90's, so far less 'peeking at the competitor for advice' was possible
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