Молодежь и наука. Том 1, часть 1

ДЕЛОВОЙ ИНОСТРАННЫЙ ЯЗЫК. АНГЛИЙСКИЙ ЯЗЫК

УДК 005.71=11

WHAT'S WRONG? RUSSIANS DON'T WANT TO DO BUSINESS!

А. Arkhipenko Scientific adviser V. Kashirina

Siberian Federal University

Small and medium-sized businesses are the economic foundation and the main driver of economic growth. They are the base for substantial part of the government's revenue and creating new workplaces. Support and developing of business initiative is of great importance for the socio-economic development of our country because considerable private sector is the best guarantee of economic efficiency, political stability and democratic development of society. It also conduces to fence-mending of our government on international arena.

As of today, there is a lot that has been done for the creating favourable conditions for doing business in Russsia (this fact is confirmed by international economic ratings, such as Doing Business, Business Barometer, etc.): so-called "tax holidays" for newly-created businesses in production, science or social sphere, support of crediting activity, different tax benefits, subsidies and grants for running business. There is also a great number of organizations, funds and business-incubators to support SMB. According to data collected by Doing Business, starting a business in Russia requires 7 procedures and takes 15 days (to compare with 2013: 8 procedures and takes 18 days correspondingly).

The specialists of World Bank, who made the "Doing Business-2014" rating, noted the following progress in Russia by the beginning of 2014:

−Starting a Business: Russia made starting a business easier by abolishing the requirement to have the bank signature card notarized before opening a company bank account.

−Registering Property: Russia made transferring property easier by streamlining procedures and implementing effective time limits for processing transfer applications.

−Trading Across Borders: Russia made trading across borders easier by implementing an electronic system for submitting export and import documents and by reducing the number of physical inspections.

The entrepreneurial climate in Russia is formally improving, but what is the real way it is?

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First, many experts consider all these ratings as a convention. Doing Business cannot not serve as an absolute indicator of condition of business environment and give an adequate assessment of current state of affairs in the whole country, because The Doing Business data are collected in a standardized way. The collected data refer to businesses in the economy’s largest business city (Moscow – in Russia), not including the regions. This index is mainly based on the level of administrative regulation. It also does not reflect concerns connected with security, popularity of bribery and corruption, market scale and macroeconomic stability.

Actually, the majority of potential Russian businessmen are pessimistic about possibility to start their own business.

According to Russian Public Opinion Research Center (VCIOM) research twothirds of Russians do not want to be private entrepreneurs (63 %); remarkably, 52 % have never thought about that (in 2011– 43 %); 11 % thought about that but currently do not want to do business. Those, who do not have their own business, do not want to do a business in the future.

There are two obvious trends. The first one is that the attitudes of Russians towards private entrepreneurs are improving: whereas in 2009 the share of Russians who treated them positively was 79 %, today this share makes up – 83 % (the majority have friends who are private entrepreneurs), but at the same time they are not willing to run a business themselves.

Today those who want to run a business are mainly residents of middle cities (32 %) and Russians aged 18–24 (46 %). But while higher school students demonstrated promising level of business intentions in 2010 and 2011 (8,5 % and 5,7 % respectively), there was only 1 % of students in 2012 who were going to become entrepreneurs within the next 3 years. In comparison with working in large companies and in government service, attractiveness of entrepreneurial activity among students is not too big and equals crisis value in 2009.

Active entrepreneurs, planning to launch new business make a half of Russian having such intentions. Novices among the potential entrepreneurs are just about 3 %.

There is not only low level of early entrepreneurial activity but low growing power of enterprises created. The majority of them cannot overcome the initial stage of developing.

According to the Russia Economic Report #31, presented on March 26, 2014 in Moscow, Russia experiences an economic recession. Besides, it is estimated that real GDP growth rates have decreased to 1,3 % as compared to 3,4 % in 2012. The Business Confidence Index has also dropped down. Latest events connected with Crimean crisis have led to credibility issues, that have been existed for a long time, starting to grow into credibility crisis and to sharpen economic gaps in the present pattern of growth that has led to decrease in entrepreneurial and consumer confidence. Today Russians assess the conditions for doing business more and more negatively than 4 years ago.

It was a forced step for 37 % of Russian entrepreneurs to run a business because they had no other opportunities of getting income. Therefore, unlike European countries, people in Russia start their business without any purposes to promote their great idea, reach public recognition or prestige and just to secure themselves against the unstable future.

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Table

How would you assess the conditions for the development of private entrepreneurship in your community? (close-ended question, one answer)

The results of Global Entrepreneurship Monitor, GEM (team of researcher from Graduate School of Management, St. Petersburg University for several years already represents our country in this project) also tell us about negative tendencies in Russian economy and business.

According to the survey of 2000 of Russians, there were twice as many entrepreneurs in 2013 who closed their businesses, mostly because of unprofitability in comparison with the previous year. If to compare with January 2013, in January 2014 the part of unprofitable organizations has increased by 1 % which is resulted in a rate of 36,1 %. Often, business just decides to go underground.

So what prevents Russians from starting business?

Persons who are not willing to have their own business think so due to many reasons: inappropriate age and poor health (18 %), lack of desire (16 %), lack of knowledge (10 %), lack of information and means (11 and 10 %), administrative barriers (13 %). Other reasons are less common: 4 % are satisfied with the work they do; 4 % are afraid of responsibility; 3 % point out corruption; 3 % believe that business is not profitable or say that they have never thought about starting up their own business.

It is interesting that administrative barriers (Russians refer taxes and bureaucracy to them) have doubled (if we add one more reason – corruption and crime level, we will have 16 %).

In the Institute of Contemporary Development (INSOR) research corruption is stated to be the second important problem after the problem of housing and communal services. According to public organization OPORA's statistics only 10 % of entrepreneurs have never faced with the fact of corruption. That is why people, if they have not any right connections, prefer not to be involved in entrepreneurial activity.

As it turns out, 53 % Russian respondents are afraid of bankruptcy in case of running their own business and the loss of ability to pay, loss of all the property, belongings and savings.

Inaccessibility of government orders and difficulties with attraction of investments are also in the list of factors keeping check on business development.

What is more, Russia has rather low unemployment rate in comparison with European countries. According to Russian Federal State Statistics Service (ROSSTAT) in February 2014 this rate was 5,6 %.

Additionally, one fifth of respondents do not admit the possibility of losing their job.

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Judging by the revenue structure of Russian population, our fellow citizens prefer quiet life of a wage earner and there are not so many people who are ready to risk running their own business.

Nowadays, much attention is given to the problem of small and medium-sized business, but, unfortunately, conditions for doing business do not change qualitatively. One thing is for sure: Russian people have an entrepreneurial spirit. Hopefully, Russians have not been totally discouraged for doing business and soon we will see rebirth of business, openings of new enterprises, firms, the burst of activity that would reflect the reality better than any international ratings.

References

1.World Bank. 2013. Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises. Washington, DC: World Bank Group. DOI: 10.1596/978-0-8213-9615-5. License: Creative Commons Attribution CC BY 3.0/

2.Федеральная служба государственной статистики [Электронный ресурс]. URL: http://www.gks.ru/

3.Всероссийский центр изучения общественного мнения [Электронный ре-

сурс]. URL: http://wciom.ru/

4.Global Entrepreneurship Monitor [Электронный ресурс]. URL: http://www.gemconsortium.org/

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УДК 334.72

YOUTH AND SOLE PROPRIETORSHIP

M.V. Bistrova

Scientific adviser V.V. Kornienko

Siberian Federal University

It is known that youth is the most active part of any society. Young people have a high entrepreneurial potential and are able to make their contribution to the socioeconomic development of the country. Being creative and go-ahead, young people can develop unusual innovative ideas and create new small businesses.

However, in Russia the youth entrepreneurial potential is not used at full capacity. Perhaps, it happens because young people choose a passive attitude and they are afraid of difficulties, which the foundation of business could be connected with. Besides, the cause of this situation could be the lack of knowledge and skills which are necessary to set up and run a business and limited information about opportunities.

First of all, we need to understand what the term «sole proprietorship» means, its development in our country, as well as the advantages and disadvantages.

A business may be owned in three different forms. These forms are the sole proprietorship, the partnership and the corporation. The sole proprietorship is the most common in many western countries. For example, more than 80 per cent of all businesses in the United States are sole proprietorships.

Sole proprietorship is one of business form, which is ruled by one owner and there is no legal distinction between the owner and the business.

If you are good at something and, moreover, you want to earn money using you talents, it may be worth being involved in business. For example, if you want to run a business alone, you can form a sole proprietorship. However, on the other hand, if you want to run a business with somebody you can deal with corporation and partnership. But I think that sole proprietorship is more comfortable for people.

As for Russia, entrepreneurship has a very long history there. Russian entrepreneurship has roots stretching back to Kiev Rus known for its crafts. To some extent a handicraft worker can be considered as an entrepreneur because in its way a craft shop was a small independent company operating for profit.

Nowadays the number of small business owners has become much more than it was in the last century. This is natural because a sole proprietorship has several advantages.

Firstly, you do not have to divide your profits with anybody as you manage your business and make decisions regarding its management by ourselves. Moreover, you become responsible for your decisions, so you can dispose of your profit according to you needs.

Secondly, it is you who choose a type of business and field of activity which you want to be involved in.

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Thirdly, you are independent from other people, such as partners or other shareholders. You control and manage your assets alone, unlike members of a corporation, where the Board of Directors supervises management.

Another advantage of setting up a sole proprietorship is the fact you will have opportunities for self-actualization.

Finally, it is easier to establish a sole proprietorship than other types of proprietorship. Moreover, there are a number of tax advantages. You do not need a special lowers consultation, but you can, certainly, ask a piece for advice.

Considering all these advantages the number of entrepreneurs entering the market is supposed to increase. However, according to received statistical data the amount of sole proprietors is reducing both in Russia and in the Krasnoyarsk Kray.

In March 2013 there were 3 799 034 sole proprietorships in Russia although, in March 2014 this number decreased to 3 485 292 [1]. Compare how the number of sole proprietors has changed in different parts of Russia for a year.

Uralian; 311633

Pic.

As we can see about 314, 000 sole proprietors have closed their business for the year. Professional associations name insurance premium increase as the main reason of that [2].

A significant number increase of those who decided to close their business has been growing since last December when about 120,000 small firms were liquidated. The owners attribute it with the government's decision to double premiums for the self-employed in 2013.

This decision negatively affected not only entrepreneurs but the state budget as well. It was expected to derive 5.1 billion rubles from taxes in 2012, instead of that, the budget did not receive 13.5 billion rubles after a great number of sole proprietorships had been liquidated.

The Krasnoyarsk Kray did not become an exception. According to Krasnoyarskstat data, the distribution of sole proprietorship in the region considering economic activity is shown in the table below. The number relate to 2010, 2011, 2012 and 2013 respectively [3].

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Table 1

Last year, SP enrollment ratios showed a positive trend. On January 1, 2012 in the region 84.5 thousand sole proprietors worked, but in the autumn their number exceeded 86,000.

However, by the end of last year a slight growth was replaced by a sharp decline: the number of individual entrepreneurs began to decrease. In December 1.3 thousand SP were liquidated and in January 2013 the number was equal to 1.5 thousand. It means that the daily average number of closed small businesses was form 40 to 50. Basically closed SP were located in Krasnoyarsk, Achinsk, and Minusinsk. As a result, the number of entrepreneurs in the region became much less than in the beginning of last year – about 83.4 thousand.

Thus, there is a negative dynamics in the country and region concerning Sole Proprietorship. If this situation does not change in the nearest future, the state budget will bear heavy losses.

To find out what attitude young people have to sole proprietorship and whether they are planning to be involved in small business, the survey was conducted.

The survey involved students from three different universities of Krasnoyarsk: the Siberian Federal University, the Krasnoyarsk Medical University and the Krasnoyarsk Agricultural University. 34 students were interviewed – 10 people from the Krasnoyarsk State Medical University, 10 respondents from the Krasnoyarsk State Agricultural University and 14 respondents from the Institute of Business Processes and the Economy, SFU. Students aged between 18 and 23 took part in the survey.

The analysis of the collected data is presented in table 2.

Table 2. The material situation of respondents

Most respondents don’t have high financial status. This is due to the fact that the survey involved students of different specialties, that’s why they have different financial situation. For example, most students of IUBPE measure their financial situation as "enough money to buy household appliances, but not a car." The answer «We have enough money for food, but to buy clothes is a problem» was chosen by most of the respondents from the Medical University and the Agrarian University. Students of economic faculty have a higher financial position.

Most respondents (79 %) showed a positive attitude towards people who are involved in business activities. 18 % respondents had a neutral attitude, and only 3 % of the respondents expressed a negative attitude towards entrepreneurs (1 person from Medical University).

It has been found out that 32 % of respondents have entrepreneurs in their family while 62 % have entrepreneurs among their acquaintances. Nevertheless, only 6 % of respondents are engaged in running a business (2 people are getting economic education).

Young people's ideas about the Russian businessmen working in small businesses are very different. However, characterizing Russian proprietors working in the field of a small business most respondents mentioned such features as "the ability to negotiate" (35 %), "hard work, dedication" (35 %), "leadership, activity" (12 % of respondents).

Moreover, risk sentiment, adventurism, education and professionalism are in the list of rare mentioned personal qualities (9 % of respondents). Youth believes that Russian entrepreneurs working in small businesses, are an active part of society and people who possess leadership qualities, resourcefulness and communication skills.

As for the reasons, which deter a person from setting up a business, about 50 % of respondents named a fear of failing in the market. 24 % believe that a person has no material opportunities to run a business alone.

Respondents were asked to clarify the components, which affect the choice of the field of business activity. The leading positions were taken by the demand for this service (35 %) and earning money (30 %).

In spite of the fact that at the moment only 6 % of respondents are engaged in running a business, in the future 71 % of respondents would like to organize their businesses and only 9 % don not consider a private business as an opportunity to earn money.

A great variety of activities were given by the respondents as business opportunities: a sales point in the market, an entertainment agency a tattoo parlour, a sports shop, chemist's shop, a beauty salon, a restaurant chain (was marked by 4 people from 34), etc. Most of medical students would like to organize businesses related to their profession (pharmacy, cosmetology clinic). 50 % of those who want to start their own businesses will strive to implement their plans in the nearest future.

According to the data, 50 % of all respondents pointed out that they currently have the knowledge and skills necessary to be engaged in entrepreneurial activity while 24 % said that they don’t such knowledge. At the same time, 47 % people are mistaken supposing that it is difficult to organize a business and a special lower’s advice is needed. In fact, a person can find all the necessary information by himself searching in internet or addressing specialized organisations.

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Summing up, the survey showed that young people want to be involved in business. A great amount of people, in our case 71 % of respondents, would like to establish their businesses, though, very few people know about the registration procedure of a sole proprietorship. Nevertheless, it is very easy and not expensive (800 rubles) to register the assets. The lack of such knowledge is one of the factors that can prevent people from starting a business. Other factors include unlimited liability, a fear to take a lot of responsibilities and to fail.

Being a common type of proprietorship prospering in western countries, it is not so successful in Russia due to imperfection of legislation and tax system. For example, in 2013 insurance premiums were increased that negatively affected a lot of small businesses. To change the situation in the country it is necessary to improve legislation and provide special programmes of small business support.

References

1.Картотека «КОММЕРСАНТЪ» [Электронный ресурс]. URL: http://www.kartoteka.ru/info_ip/

2.Форум. Ипец. РФ [Электронный ресурс]. URL: http://xn--e1afv3a.xn--

p1ai/?p=348

3.Федеральная служба государственной статистики по красноярскому краю

[Электронный ресурс]. URL: http://www.krasstat.gks.ru

4.Федеральная налоговая служба РФ [Электронный ресурс]. URL:

http://www.nalog.ru/rn77/ip/

УДК 338.2 (571.51)

KRASNOYARSK MARKET PERSPECTIVE

FOR SOLE PROPRIETORSHIP ESTABLISHMENT:

A CHOICE STRATEGY

E.C. Trushnikova

Scientific adviser N.A. Grishenco

Siberian Federal University

Abstract: the majority of people would like to be a sole proprietor. Limit of money now is not a problem. Having 18 000 rubles can be enough for starting. Opportunity can be used for a future profit, which can help with achieving new step in sole proprietorship. Combination of opportunities and ways of taking money demonstrate right of statements.

Keywords: business, sole proprietorship, money, profit, charges, start capital, market.

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1. Introduction

In the modern world the majority of people have thought about the business actions, but because of limits of education, money and persistence, they usually refuse from this idea. Our government now would like to increase the level of sole proprietorship and to create special ways for huge number of them.

The establishment of sole proprietorship is very time-consuming. First of all, you should work out the idea and secondly you should find the course of investment.

2. Methodology

The focus group consisted of 30 individuals. We employed interview and brainstorming activity as the method of our research. The interviewees include the secondyear students of the SFU (Siberian federal university, Krasnoyarsk, Russia). The interviews took place between September and October 2013. The interview questions start with asking about the development of the innovative ideas for sole proprietorship. Then we asked about the possible ways to get financial recourses. Finally, we conduct brainstorming activity with the purpose to find out the possible market niches which could be the most suitable for starting the sole proprietorship. For performing that activity the focus group was provided with the up-to-date information of social, technological, economical, political situation in Krasnoyarsk, Siberian region.

3. Results

3.1. The largest amount of respondents considered soap boiling business to be the most suitable for starting the sole proprietorship. 25 % of respondents supported the idea of 3-D printing clothes business. The same number of respondents mentioned the production of perfume for losing weight as the most interesting business for development. Train-casino and hotel in the bus business was suggested as the possible variants as well.

The innovative ideas for sole proprietorship

5 %

clothes

Perfume for weight loss

Fig. 1

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