The FINANCIAL — The massive layoffs following the start of the economical downturn encouraged youngsters to start up their own businesses. In interview with The FINANCIAL, young entrepreneurs discuss the successes and difficulties they faced when starting up business. They state that it is an important part of one’s career, being the employee, and a necessary one for those planning to someday be in the position of employer.
Gocha Nikolaishvili, 22, is former worker of Procredit Bank Georgia, who launched his own business as soon as he lost his job.
“I suddenly found I had free time and so started working on the projects Siva,” he says.
Siva is a small company giving school-leavers special education to help them enter higher education. Caucasus University supported this project and it soon turned into a successful business.
Nikolaishvili says that the main advantage of his business is its innovation. The company has no direct competitors. “Our service is different from others in the sphere,” Nikolaishvili says.
“Our courses have become very popular and in demand among our customers. For 2009-10 academic years, we estimated that we would assist 100 pupils but we have already received 273 applications. The number is still growing as the deadline is October 15. This is the first time for me that I have tried to run such a prospective business and I am confident in its future success,” Gocha Nikolaishvili says.
Now Nikolaishvili holds 50 percent of the shares in Siva and the position of Director.
Siva employs 30 staff members. “The global recession has not affected my business. Regardless of the economic climate every school-leaver has to prepare for entrance in to university,” he notes.
Nikolaishvili does not give out the exact sum invested by him in the business Siva. “However I can state that starting up a business with just a small budget is possible. During my work at the bank, I became informed about the businesses of the people I was serving. I met people who had started up small business from just USD 300.”
“The most important thing is to be purposeful. Perhaps after 10-15 years we will not have such ambitions. Usually youngsters are more able to adapt to innovation,” Nikolaishvili believes.
Nikolaishvili started running his private business when he was still in his second academic year at university. Simultaneously he was an employee in the private sector. “It is very important to experience being an employee if one is to someday become an employer,” he says.
“I think that students should start looking for a job before graduating. That will help them to be more competitive,” Nikolaishvili says.
Nikolaishvili says that despite the global recession, banks will still finance businesses. “If a business is generally successful and does not frequently suffer any unexpected slumps, then the Bank will become interested in financing it.”
“Running your own business is much more difficult than working for others. Now I am working for 15-20 hours a day. I sleep a maximum of 4 hours. But still, the result is the main encourager for me,” Nikolaishvili says.
Vakhtang Meladze, 22, is a first class student of a master’s degree study in the International School of Economics at Tbilisi State University, (ISET). He is also in the business of importing both new and second-hand clothing from Europe. Last year Meladze was a probationer in the Bank, but at the beginning of the global recession quit his banking career.
“Combining work and study is difficult. When you are running your own business it’s easier to find free time,” he says.
“I am an employer, doing my own business, but I wish to work as an employee so as to become more experienced,” Meladze says.
Meladze notes that after some work experience he would prefer to continue his running own business in the future as in Georgia the fiscal compensation of workers is not adequate to their work. Employees are working for a long time and get minimal compensation for it.
“After graduating from ISET I would like to start working at the Ministry of Economics or in the World Bank,” Meladze says.
Meladze sells imported goods by wholesale. He says that there is big competition in his business. “To keep customers I am trying to work on a minimal margin. Whereas previously customers were choosing goods according to their quality, now the main determiner is price. When I get customs clearance for imported goods in retail it sharply increases the cost of clothes,” he mentions.
“You cannot find a non-assimilated market niche in Georgia. There is a syndrome of copying in our country. When someone starts some kind of innovative service, it is copied by others and thus the author of the original idea starts losing their customers. I cannot see a more prospective business direction than the distribution service. The nutrition sphere is also a prospective one, but it needs large amounts of investment. I was thinking of developing small sized production, but there I would face much competition from large-scale importers,” Meladze declares.
“The development of small sized business is very important for the country’s economy. Actually in Georgia micro businesses are developing the most. You can find only one or two big industries, usually run by foreigners, for every large group of small businesses,” Meladze says.
Meladze notes that micro business in Georgia needs the support of the Government as it has from banks or other institutions. “Rules at customs offices are very strict and complicated and quite high taxation on the customs is sometimes harmful for micro businesses”.
Irakli Antidze is doing his fourth academic year at Caucasus School of Business (CSB). He participated in the project of young entrepreneurs, which was organized by Caucasus University (CU) and French Business Council (FBC). “We did market research, decided to offer something creative and innovative, and won the project. Our project included preparing ecological firewood from sawdust. The sawdust is pressed at high temperatures and from that we create fuel firewood that is very popular in European and eastern countries,” he says.
“We are the 59th members of FBC, smallest sized business, but with big perspectives. We are planning to develop the market in Georgia, expand the culture of using briquettes and export to European countries,” Antidze says.
Antidze was working at KOR Standard Bank but after the beginning of the economical downturn he lost his job.
“I was trying to start producing nappies but even during discussions, it became clear that it had no future because of the level of competition on the local market,” Antidze says.
Antidze notes that the banking industry is involving its workers so that they become a property of the company. “You start discussing plans for your career in the frames of the company. Maybe you plan to become head of a credit department or manager of a branch after several years but such organizations limit your creativity. The situation is similar in every private organization.”
“However, we cannot say that every person should run their own business. If a person does not have the special abilities needed to become an executive, he/she might prefer to always remain in the position of employee,” Antidze says.
Antidze notes that a recession is actually the right time to start running a small business. He believes that the restaurant business is a most prospective and lucrative field.
“In the latest international ratings Georgia was named most developed in terms of starting up business. We get positive results from the liberty of being an employer, but as for property rights, entrepreneurs are less safe than others,” Antidze believes.
Written By Madona Gasanova
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