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During the shifting economic circumstances that have occurred over the past several years, some people in Latvia have decided to become the masters of their own destinies by establishing new companies. At the same time, however, there have been existing enterprises – some of them seemingly quite stable, indeed – which have ended operations. For that reason, this month’s DNB Latvian Barometer focuses on what people think about the factors which guarantee business success – those that would encourage them to launch their own businesses.
The results of the study show that many respondents believe that the availability of financing is the most important factor in deciding to launch a new business. The establishment of a good business idea, by comparison, is seen as being less important as a stimulus. Respondents were asked about successful businesspeople and their successes, and in this case the availability of major financing was ranked only in 5th place (37%), while a good business idea was cited as the second most important factor (42%). It must be noted that readiness to take a risk was at the top of the list (46%).
Asked whether they had thought about launching their own business, more than one-half of respondents said no. 28% said that they have thought about it, but have not actually done it yet. 9% of respondents have their own business or are actively working on the establishment of an enterprise and on the pursuit of relevant ideas.
Asked to comment on these data, Latvian Economics Minister Daniels Pavļuts had this to say: “The results show that the range of potential businesspeople and business ideas remains quite extensive in our country. People most often say that capital availability is the prerequisite for launching a business, but they also admit that courage and a good idea are the foundations for a successful business. That is exactly what people must remember – capital availability is not always the main obstacle against the pursuit of a business idea; the decisive factor may be readiness to take risks and to be courageous and ambitious in pursuit of the idea.”
Respondents were asked to name stimuli that might encourage them to launch a business. 41% cited money for investments in the business, and only 27% said that a truly fine business idea would encourage them to take that step. Only 21% of respondents spoke of stimuli such as lower taxes, 16% plumped for better state support programmes for businesspeople, 13% said that of importance is a belief that the economic situation in the country is improving, the same percentage pointed to the presence of colleagues or business partners in the process, and 12% plumped for other resources that can be used to develop a business. It must be noted here that 24% of the respondents said that nothing could encourage them to launch a business.
Respondents were asked about the areas in which they would like to launch business operations, citing services and retailing (10%), agriculture (6%), and public dining (4%). 3% of respondents pointed toward beauty care, logistics and transport, wood processing and forestry work, automobile transport and relevant services, as well as construction and renovation. 35% of respondents could not cite a specific area in which they might establish a business.
The next question was about the main benefits of engaging in business, with 63% of respondents speaking about earning a living, 56% discussing the ability to do something which the respondent enjoys, and 54% pointing to the ability to organise their own lives and time. A bit more than one-third of the respondents (35%) said that a benefit is that if one runs one’s own business, then one is not subordinate to anyone else. Far fewer respondents spoke of benefits such as the ability to gain new knowledge and experience (23%) or the ability to increase their own self-confidence (17%).
Respondents were also asked about possible losses for those who engage in business, and 59% spoke of additional stress, 59% noted that money can be lost or not earned, 42% worried about an insecure future with a lack of stability and high levels of risk, and 38% identified less free time to spend with family and friends as a problem. 25% of respondents believe that running a business is harder than working as a salaried employee, and 21% think that establishing an enterprise means doing lots of things that they would not want to do – establishing relations with government institutions, handling paperwork, etc.
Finally, respondents were asked to name specific businesspeople who they believe set a good example for others. 8% cited Aivars Lembergs, 5% mentioned Gunārs Ķirsons, 3% plumped for Vitālijs Gavrilovs, and 2% cited Bill Gates and Raimonds Gerkens. True, 43% of respondents could not think of anyone to mention in this context.
The director of the SKDS market and public opinion research centre, Arnis Kaktiņš: “The answers given by respondents to this last question clearly show that there is a shortage of positive symbols in Latvia’s business world. The answers also illustrate the true ‘face’ of businesses in Latvia insofar as the country’s residents are concerned. Usually it is the case that other people serve as an example or a source for inspiration to us, and if many people have no such example, then it is not surprising that only 9% of people who are of working age in Latvia have launched their own businesses.”