SME Forum: 5 trends of the future Ukrainian entrepreneurs should keep in mind
Small and medium-sized businesses provide jobs for 80% of the population and extensively contribute to the state budget. Every year, the amount of taxes they pay increases by about a quarter. At the same time, 9 out of 10 new companies in Ukraine fail. In 2018, Financial Times named Ukraine the first of all post-Soviet states that managed to improve its business climate. However, the country ended up 71st in Doing Business 2019 ranking.
Excessive state regulation, credit rates at 18% per annum as well as low export opportunities are to blame. But the most important problem is that Ukrainian entrepreneurs lack business education. They are ready to learn but it is difficult to overcome numerous challenges of the modern world on your own, especially when they require continuous self-improvement. It was the thirst for new knowledge and the desire to find like-minded people that brought together participants of the first Small and Medium-sized Enterprises Development Forum in Ukraine, which took place on June 22, 2019. The event was organized by SME School and KIEF on the initiative of Vasyl Khmelnytsky, UFuture’s founder.
Many world-class entrepreneurs who have achieved outstanding results began to build their business empires from small companies, taking risks and having their own “skin in the game,” as Nassim N. Taleb would put it. Small and medium-sized enterprises create new opportunities for investment and conglomerates. They flexibly respond to changes in the economy, create a competitive environment for the development of innovations, saturate the market with new goods and services, and promote the efficient use of local resources. In his speech, Vasyl Khmelnytsky highlighted five trends of the future. The first is the internet of things. Entrepreneur says, we no longer imagine our lives without it. Smart homes, electronic keys, voice assistants – all this will help people to manage their time more effectively.
The second trend is the urbanization: today there are 31 metropolises on the planet with a population of more than 10 million people. According to the founder of UFuture, soon these cities will be much larger.
“When I was born, there were 3.5 billion people on Earth. Today there are more than 7,5 billion. In 50 years there will be 11 billion. And 80% of them will live in megacities,” said Vasyl Khmelnytsky.
The third trend is climate change and contamination of the environment. They are driving the extinction of many species and make clean air and drinking water a luxury.
The fourth trend is automation: according to the founder of UFuture, over the next 10 years, 75 million jobs will disappear. Robots are durable, they can work around the clock and they are never in a bad mood. Today, machines are able to recognize faces, voices, and emotions of people. They are able to come up with dramatic scenarios, write articles, create music and paintings. Revolution 4.0 creates both robots and jobs for them.
Vasyl Khmelnytsky called the last trend “Homo sapiens 2.0”: a human being will change physically. There will be a possibility to print internal organs on 3D printers, add or remove genes and even choose your own eye color.
In this dramatic shift, small and medium-sized businesses will play an increasingly important role. It is SMEs that are the basis of a progressive economy. In Poland, they produce 54% of GDP, in Latvia – 70%, in Estonia – 76%, in Denmark – 59%. In Ukraine – only 15%. However, Vasyl Khmelnytsky is convinced that this will change.
There are 1.8 million sole proprietors and 1.2 million legal entities in Ukraine. Most new businesses are specialised in wholesale and retail trade, service provision, software development, agriculture, beverage and food, textile and engineering, and educational programs.
Professor at the University of California at Berkeley Rick Rasmussen, who helped to kick-start more than 10 business accelerators and who is currently the mentor of more than 1,000 successful companies around the world, gave three tips for those Ukrainian entrepreneurs who are eager to bring their businesses to the global market: make sure your business enjoys a stable growth in your home country; provide sufficient financial and managerial resources; and, most importantly, try not to destroy the company in an attempt to expand it.
Rick Rasmussen suggested that Ukrainian entrepreneurs should give it a try in the neighboring countries, such as Poland, Moldova, Belarus, Hungary, and Slovakia. This will allow to reduce the risks.
CEO at UNIT Holdings Kostyantyn Yevtushenko, a specialist in the field of alternative energy, advised to make sure that there is a high-quality product, that the team of specialists can work well together, that a detailed business model has been developed, the core of the client base has been formed and a certain market share has been obtained. Only when this all set, when the demand for a product greatly exceeds the offer, should you start scaling, warned Kostiantyn Yevtushenko.
The head of SME School Lidiya Pashchuk talked about the institution she runs and how it helps Ukrainian entrepreneurs: “When Vasyl Khmelnytsky set up a goal of creating something to facilitate the development of small and medium-sized businesses, I understood that it should be global and useful. I knew that entrepreneurs don’t not have time for babbling. We wanted to make the program, which now lasts for only 6 to 10 days, as effective as possible.” While opening their first school in Bila Tserkva, Lidiya and her colleagues understood that this was only the beginning. At of today, 35 SME Schools operate in 14 cities of Ukraine.
Among other speakers of the Forum were such well-known businessmen, investors and analysts as the founder of OKKO Group and Concern Galnaftogaz’s president Vitaliy Antonov, founder of Visotsky Consulting Oleksandr Vysotsky, founder of the SUPERLIUDY project and ex-brand leader at FEDORIV Vlad Nozdrachiv, founder and CEO of Artveoli, Inc. Alina Adams, CEO at Havas Group Ukraine Natalia Morozova, founder of the clothing brand Indposhiv Bespoke House Katerina Vozianova, founder of the marketing agency Roman.ua Roman Rybalchenko, managing partner at Boyden Global Executive Search Alex Dolgikh, corporate business director at Raiffeisen Bank Aval Ruslan Spivak, founder and CEO of Stekloplast Company Natalia Yeremeyeva, UMa & UMi, founder of children’s jewelry brand and co-owner of the World Donatas company Fedir Drozdovsky, head of sales at the Ukrainian online service Grammarly and co-founder of Urban Space 500 Ihor Karpets, managing director at ESKA Capital Serhiy Vaskov, founder of Vector online business magazine Dasha Zarivna as well as deputy minister of economic development and trade of Ukraine Nataliya Mykolska.