Natalia Vstovskaya: State Support of Entrepreneurs. How to Get State Budget Funding
Not all entrepreneurs know about the state programs and funds allocated to support existing and new business ventures. There are different instruments of support which help to scale up a business, to create new production facilities. How to make these instruments work for the benefit of your own company? Natalia Vstovskaya, Friendly World Consulting Agency General Director who has presented Smena for many years at our exhibition shares her opinion and advice.
Support measures really work. But not all those who have the right to receive support use this resource. Often one of the reasons is a simple ignorance of existing opportunities.
The necessary information about the support programs can be found, first of all, on the website of the Ministry of Industry and Trade; on the websites of Funds, for example, of the Fund of Support of Small and Medium Business, or of the Industry Development Fund, or on the websites of the Industry associations. For example, in 2013, the Association of the Industry of Children's Goods Enterprises had made a large-scale work to introduce a program of funding support for R&D works for the enterprises manufacturing goods for children. It was due to this program that some companies started innovative projects and received funding.
How to get the necessary expertise? You can have an employee educated, or hire an outsourced specialist, or get some advice in the Ministry; and again, in industry associations.
Another reason is that many business leaders are unwilling to cooperate with the government being afraid of the global control from its side, when the company is literally tortured by inspections.
Indeed, in order to receive any state support one should comply with rather hard requirements. It is necessary to study them attentively. At the same time, you have to know that the company financials will be requested for check only within the limits of the supported project.
There’s also a question, that, as a rule, the state support compensate the loans interest; and not too many companies have an opportunity to get a credit, especially small companies. However, there are also other opportunities, and they have to be studied. One of such effective and still undervalued support measures is investment into research and development projects, which I mentioned above.
The RND support concerns real compensations for the work executed within a running project. It is very important for small business. By virtue of investments, the chosen company develops and starts factory production of innovative products competitive in the market.
Although not too many companies start innovative projects and receive grants. Why?
The reason is that there are no projects. There seems to be an intention, but there are no ideas and no breakthrough technological inventions. Nobody in business can project them and make necessary calculations. Although there are scientific research institutes whose task is to develop these ideas and project modern technologies. The managers of enterprises do not yet understand a serious and profitable effect that can be given by partnering with, for example, a well known Central Scientific Research Institute of the Garment Industry. This institute actively develops pioneering technologies: they create children clothes with high hygienic characteristics, fire-resistant and thermal garment and clothes made of it, special clothes for extreme working conditions, including clothes with heating and other innovations.
Such projects can bring a business to a new level. I’ll give some successful cooperation examples. The R&D Institute in cooperation with the Pavlov-Posad Worsted Integrated Works Enterprise has designed a garment with biocidal characteristics for school uniform. The garment is treated with nano particles of silver ions. The new garment characteristics decrease viral shedding, and this prevents mass disease of children. Arcticline together with the R&D Institute created a new line up of clothes for children based on new sizes typology and has introduced this collection to foreign markets. Smena together with the R&D Institute has developed a school uniform with new characteristics that prevent children from a widespread scoliosis.
To successfully qualify for state support measures, it is important for your project to meet strategic trends of the textile industry development and to comply with one of the officially declared sub-programs. It is necessary to take into account an important point: it is a competition selecting the best ones.
Before you start developing your business plan, I recommend you to carefully review the criterion the project will be evaluated on. First of all, it should be cost efficient and should have a high rating for the official key project indicators. The state is interested to and competitive products of high demand.