“Yesterday’s competitors can become tomorrow’s partners,” Natalia Kalinkina, CEO of INDAX
Ukrainian entrepreneurs, compared to European, American, or, say, Turkish, have a number of very advantageous features. Entrepreneurship in Ukraine has never been systematically supported, and even restricted in Soviet times. Therefore, today, domestic businessmen can overcome huge challenges, find opportunities for growth in difficult conditions, quickly change focus, cope with economic crises, and much more. At the same time, they almost never count on state support.
At the same time, they are reluctant to enter into partnerships and collaborations, which is somewhat contrary to global trends. If American colleagues want to have 10% in a multimillion-dollar company, Ukrainians — 100% in a company that may not even make a profit.
“Partnerships are just necessary. A bank loan is a partnership. Investor funds are a partnership. Yesterday's competitors can become partners very quickly."
In the INDAX production accelerator, we work a lot with Ukrainian entrepreneurs, and we have identified three key obstacles that prevent the business from developing and expanding:
- Lack of financial strategy. Entrepreneurs often do not realize how much they earn today, how much they need tomorrow, and how to generally manage financial flows.
- Lack of business strategy and understanding of market positions. Almost every business originates from spontaneous entrepreneurship. This is normal. If you calculate everything at once, the company can be closed at the start. However, when the entrepreneur reaches a certain level of development and the company begins to grow, systematizing its work and developing a business strategy is simply necessary.
- Reluctance to work with partners is the third most common obstacle to growth and scaling. Sooner or later, the business still needs to be developed and for this, you will have to agree either with the bank, or with the investor, or with another businessman. Otherwise, the risk of losing is very high.
“Win-win in business is a partnership. Entrepreneurs must cooperate with each other, with investors — to succeed. But you need to choose your partners very carefully.”
About the synergistic effect
Thanks to the trend of business education that has emerged in Ukraine in recent years (previously it was considered that entrepreneurship does not need to learn) and the active development of business communities (in our Win Win Club due to networking between participants were launched five business projects), partnerships began to develop. The culture of collaborations is actively spreading among Ukrainian entrepreneurs. At the same time, everyone is looking for a synergistic effect. Why?
It is very important that your partner has different traits from those you have. Thanks to such qualities, the partners complement the project. For example, in INDAX we do not just give money, but provide support in all areas that are important for the entrepreneur — it’s smart money. We help develop strategy, marketing, finance, manage marketing strategy, market competencies, etc. In essence, the entrepreneur is the engine that drives the business, and we — the support. This is a synergistic effect.
Often, one partner can take full control of operations and the other can invest. There is also a synergy here: one wants to make money on the invested funds, and the other to develop the business.
We have seen many cases where entrepreneurs with very different characteristics have created successful partnerships: one is very effective in market development, management, marketing strategy, and the other a cool technician. This is, again, a synergistic effect. If you don’t notice it, the partnership is most likely doomed.
"Two identical partners will quarrel and break up."
Partnership is not always money
Once our accelerator was approached by an entrepreneur who, in his opinion, needed $200,000 to scale. We calculated the case and realized that only $50,000 was needed. The entrepreneur decided to sell one of his apartments and invest in the business himself. It was a success for us: we helped not to attract investments, but to use them effectively — and this is even more important. Even if we did not participate in the project, did not invest, most likely, we will join it later. When the entrepreneur reaches a new level of scaling, he will turn to us again.
Another project came to us for investment, and during the analysis it turned out that they have problems with financial accounting. Part of the business turned out to be simply unprofitable. We persuaded the businessman for a long time to close this area, and in the end he agreed. The businessman began to close the vacated niche with the products of competitors, who, apparently, continued to lose money on them. In addition, he finally became a financier and began to keep financial records more efficiently. According to the results of three months, it is noticeable that he is doing much better.
What is needed for the development of partnerships (and business in general):
- State participation. When the government in Turkey gives a subsidy of 50% of the cost of production, no matter how hard we try and how we partner, some projects in Ukraine will be impossible to implement. After all, the Turks sold them with a free loan. Competition is at the policy level, and this must be taken into account.
- Improving the level of education of entrepreneurs. The trend for the development of entrepreneurs is very important. The more specialized educational programs for entrepreneurs, the better.
- Community interaction. There are a lot of clubs that give values such as communication, mutual assistance and, again, partnerships.
- Search for growth points. If the business has no problems, it will disappear very quickly. There are problems in any business, and it is important to notice them. If you see problems with financial strategy, with market analysis, with understanding where and how you are moving — this is normal. The main thing is to fix it for yourself, and turn problems into problems and solve them. Finding such weaknesses helps businesses grow and grow.
In order not to lose in the partnership, it is important to prescribe clear and detailed partnership agreements; agree in advance on the terms of withdrawal from the partnership. But working alone, not communicating with the market, not sharing your pains and problems is definitely not the way out.