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Entrepreneurship and Small Business












For the Russian economy to develop its potential there is an immediate need to reform and establish appropriate institutional, legal, and taxation frameworks, as well as to create an economic and political environment, which would encourage increased activity of small businesses.

At present small and medium-sized businesses are main employees on the Russian market, a source of scientific and technical progress, and technological innovations. They became a principal driving force of economic development in Vologda too.

Sectoral distribution of small enterprises in Vologda is characteristic of Russia as a whole. Fields of action are trade, real estate operations and lease, construction, agriculture, and manufacturing. Small enterprises employ 32,9 % of all people working in the economic sector of the oblast.

One of the goals is to change sectoral distribution of small and medium-sized enterprises in the Vologda Oblast and to increase the number of innovation firms, small companies in the sphere of housing and communal services, transport and communication, recycling, education, health care and handicrafts.

With every passing year contribution of the small-sized businesses to the oblast's economy is becoming more significant.

Over the recent years, an effort has been made to create a legal and institutional framework for SMEs in Russia, and to establish state policies and programs of SME development. A network of private, federal, local and municipal support funds and organizations has appeared. These institutions offer training, educational, informational, consulting, financial, and other services to SMEs. Recent research indicates that the majority of small and medium companies consider government support to be most needed in the early stages of their development. Government support is needed on all administrative levels (i.e. federal, regional and local).

In 2016 direct forms of financial support such as grants and subsidies (at the sum of RUR 53.2 mln) were received by 37 small businesses. The implementation of these projects allowed to create about 79 new jobs.

Programs aiming to develop infrastructure, presenting a legal framework, regulation and institutions of enforcement, finance and credit support for small entrepreneurship development are adopted in most municipalities of the Vologda Oblast.

A stable and well-functioning tax system is of particular importance to the successful development of SMEs. In this context, local bills controlling relations in the sphere of small-sized business are examined on a regular basis with respect to the current tax system and the changes that need to be introduced in order to find an appropriate balance between the needs and interests of entrepreneurs, on the one hand, and the needs of the state (at different levels) to generate tax revenue, on the other.

The Vologda Oblast Government renders assistance and a wide range of services to start-ups by creating business incubators encouraging and assisting entrepreneurship. Business incubators, facilities designed to assist businesses to become established and sustainable during their start up phase are powerful economic development tools. They support the entrepreneurial process, helping to increase survival rates for innovative startup companies. Entrepreneurs admitted into the incubators are offered an array of targeted resources and services. The resources and services open to an entrepreneur include: provision of physical space, management coaching, help in making an effective business plan, administrative services, technical support, business networking, advice on intellectual property and sources of financing. Business incubators provide micro, small and medium-sized enterprises with assistance from experienced advisors.

Over the last years the Vologda Oblast passed several laws that provide support to small businesses across the region and enhance small businesses. Since 2013 support of small- and medium-sized businesses is carried out within the state programme "Support and Development of Small and Medium Enterprises in Vologda Oblast in 2013-2020" that was endorsed under No.1156 Decree of the Vologda Oblast Government of 3rd October 2012.

The Guarantee Fund for Small and Medium Enterprises was set up in the Vologda Oblast. The Fund was given a mantle of authority to offer a wide range of financial services, specifically for small and medium enterprises engaged in manufacturing, processing, agribusiness and services. In addition to it, the Vologda Region Centre of Entrepreneurship Support was organised in 2014 that allows parties involved in trade and transport to lodge standardised information and documents with a single entry point to fulfil all import, export and transit-related regulatory requirements.