The hidden difficulties of growing

Date: 2015-10-07; view: 653.

Table 2 Key economic indicators of small enterprises for the year 2001-2013

Despite the fact that the number of small businesses over the entire period in 2013 increased compared with previous years, this increase can not be described fully from the positive side.

According to the study "Global Entrepreneurship Monitor" many citizens, who have or want to organize their business do so because of the inability to find another source of income that characterizes the development of the economy from the negative side.

In addition, there are several other factors that do not allow to characterize the development of small and medium-sized enterprises in Russia from the positive side:

1. In Russia sectors of the real economy are badly developed. It's a great problem because some of them is a priority for the country. The share of SME organizations producing innovative products and introduce new technology is also very small. For example, for the period from 1999 to 2003. The share of small businesses in the field of science and its maintenance of the total number of small enterprises has decreased from 4.2% to 2.5%, and their number has decreased from 37.1 thousand. to 22.1 thousand[6].

2. As a further problem, the institutional aspect might be highlighted as one of the difficulties. From the point of view of small and medium-sized enterprises there are only neutral and negative assessments to authorities at different levels. Most people think that the authorities either did not affect their work, or have a negative impact. At the federal level example is the increase in insurance premiums

3. In addition, today many aspiring entrepreneurs are trying to organize their business in simple areas, such as resale. But if in the 90s such entrepreneurs can find their niche, but today such business areas are overcrowded, so the micro and small organizations can not stay on the market for over a year. Nowadays, the business organization itself has become much more difficult than it was 20 years ago. The entrepreneur now requires a broad range of knowledge and as a consequence, he must be well educated.

4. One of the major factors hindering the development of small and medium-sized businesses is corruption. Often SMEs have problems with public authorities and almost always the only way out of such situations is illegal payments to officials. Representatives of small and medium-sized businesses often experience harassment by various representatives of the authorities, when they just hint that they must pay "for a quiet life." According to some estimates, "costs of corruption" of small businesses make up 25-27 billion dollars a year[7], while in fact, these funds could go to business development.

5. Among the important factors that inhibit the development of entrepreneurial activity are such activities as: administrative barriers to enter the market, increase of natural monopoly tariffs and taxes, weak regulation of intellectual property rights, as well as the unavailability of real estate.

6. Another challenge for SMEs is to find sources of funding. This is actual both for start up companies, and for already established in the market, as they often do not have enough money for current needs or renewal of fixed assets. Detailed questions about the sources of financing for small and medium-sized businesses will be discussed in the next chapter.

7. “The annual growth of number of small firms is 9%, but at the same time 7% stop operating. In recent years there has been a tendency of outflow of the capital of small and medium-sized businesses abroad. Capital outflow from this sphere of business is a great new challenge for Russia. Analysts believe that this trend will continue”[8].

Thus, we can conclude that, all in all, the Russian Federation is slowly but surely moving towards the strong development of SMEs. But Its development can't be called a dynamic one compared to more developed countries due to a number of inhibiting factors such as corruption, the reluctance to invest in innovation, administrative barriers and a number of others. Surely, we can say that only in case of economic stability in the Russian Federation and the competent tax and credit policies there will be progressive development of small and medium-sized businesses.