The role of entrepreneurship in Uzbekistan: issues on doing business, importance of management in small business

Measures to improve the business environment and create more favorable conditions for development of small business and private entrepreneurship deserve all kind of support

The President of Republic of Uzbekistan Islam Karimov

In developed and developing countries alike, measures designed to encourage small and medium-sized businesses to transact foreign economic operations are implemented via a variety of assistance institutes. Their main function is the provision of a whole spectrum of services to entrepreneurs. A list of such services encompasses information, educational and consulting services, as well as judicial and insurance services. They also render assistance in searching foreign partners, promoting their exports through exhibitions and fairs, advertising the output of enterprises etc. Thanks to the efficient institutional support, small and medium-sized businesses in the US, Japan, the EU member states, the Republic of Korea, China and other countries take active part in foreign economic activity. Uzbekistan works out and takes diverse steps in an effort to improve the business environment in the country for the further development of small business and private entrepreneurship. These include a reduction of the number of administrative barriers that domestic entrepreneurs have to overcome on their way to foreign economic activity, improvement of a legal protection system, limitation of the state’s interference in entrepreneurial activity, introduction of tax cuts, simplification of taxation, granting of various privileges and preferences, provision of wider access to financial and material resources and other measures. The role played by small business is determined by its capacity to quickly adapt to the constantly changing market environment, to produce a considerable portion of GDP, to ensure employment, to raise the population’s standard of living and to guarantee the social stability. In many countries throughout the globe, small businesses actively participate in foreign economic activity. When studying this line of their activity, it is important to identify the factors that facilitate the export activity of small enterprises and entrepreneurs, in a move to elaborate a set of practical measures to encourage the development of this sector. Entrepreneurs are important drivers of economic and social progress and change. Much of our daily lives is greatly influenced by entrepreneurial companies. Naturally, international experience shows that small business plays an important role in the economic progress. Many such companies in their first 10 years launch new ideas or new products that transform society and the way people live, work and play. New technology, the desktop computer revolution, the internet, mobile telephony and social networking are examples of areas where sea changes have occurred in the lives of billions and still occur in all parts of the world. In each of these areas, early-stage companies have been a key stimulus to the discovery, development or broadening of impact surrounding the new idea or new product. Experience of high developed industrial countries shows us that 60 % of GDP provides small business, in this branch approximately 50 % of workers are busy from total employments. Small well-balanced development of the economy provides strong competition to create a system of motivation incentives for the better use of knowledge, skills, energy, diligence of population. Management plays an important role in business ingeneral and small bussines in particular. In small business management has its own characteristics associated with small scale and consequent to not improve the organizational structure and the absence of a clear division of labor. The effective functioning of small forms of production is determined by the discharge of their advantages in comparison with large-scale production: proximity to the local market and adapt to the needs of the clientele, production of small batches, exceptions unnecessary management levels. Production development of small businesses creates favorable conditions for economic recovery as developing competitive environment; create more jobs, actively structural adjustment, expanding comsumer sector. In addition, the development of small business leads to saturation of the market in goods and services increased export potential of the better use of local raw materials. So we can carry on talking agreements of small business a lot but in the other hand small bussines has its failures which provide to bankruptcy. For instance:

                   The owner may recognize that the business is not generating sufficient return to warrant the effort that is being put into it. This is sometimes referred to as the failure of opportunity cost;

                   A firm that is losing money may be terminated to avoid losses to its creditors;

                   There can be losses to creditors that bring about cessations of the firm’s operations.

                   The firm can experience bankruptcy or failure.

There are even times when small business owners involved in a closure consider the firm successful at its closing. So there are wildly different viewpoints. For example one of famous small business developmentcenter presented data that indicated that 95 percent of small businesses fail within five years. The main cause of failing is bankruptcy. United States Bureau of Labor Statistics indicated that 66 percent of new establishments survive for two years, and that number drops to 44 percent two years later. Exactly business failure rates is highest in first two years. It appears that the longer you survive, the higher the probability of your continued existence. This makes sense, but it is no guarantee. But today’s problem is why the business cycle is no longer and what the owner of small business should do to solve this problems? There is no more puzzling or better studied issue in the field of small business than what causes them to fail. Given the critical role of small businesses in the United States economy, the economic consequences of failure can be significant. Yet there is no definitive answer to the question but these three broad categories of causes of failure are close than other reasons: managerial inadequacy, financial inadequacy, and external factors. Lets change a theme and talk about planning, organizing, leading, controlling. If you pay attention those functions provide to management. Not only scientists but also practice shows that the functioning of small organisations in small business no need to have a manager but experience shows that one of the main factors contributing to the ruin of small businesses are lack of management knowledge in owners and heads of these enterprises. Usually, the owners of small firms themselves take a responsibility to manage. Owner of small business must not only deal with current business contrarily, he or she must look forward to seeing the prospects for the development of the enterprise. Therefore, main task of management is taking into account all factors of a particular company to determine the optimal management system in order to achieve success. For this reason from those three broad categories of causes of failures, a bit primary is managerial inadequacywhich continuously connected with small business owners or estimated like incompetence of the owner-managers. For example:

                   Not every owner of small business has a strategic plan or something looks like to it;

                   Marketing strategies are also one of important part of small business because every owner of small business spent his or her 60 % of time to realization of goods or servicing.

                   The owners of small organizations (entrepreneurs) rarely address or hire to qualified managers.

Easy organization is effective under certain conditions. First, the external environment should be both simple and dynamic. The simplicity of the environment means that the head of the organization is able to comprehend its basic characteristics and sole control of decision-making. High dynamic external environment requires an organic structure, the presence of a relatively simple and at the same time, unregulated technical system. Complex systems would require the development of structures of support staff and delegating his authority over the technical solutions, and adjustable — bureaucratic operational core. The simple structure is considered the most risky of all configurations, as it depends on the health and the whims of one man. A heart attack can literally destroy the main coordination mechanism of the organization. A small company can prepare the next generation of managers in the required quantity and desired qualifications. Typically, a small business is a family. Therefore, the higher the position of the manual is usually reserved for family members of the owner, who was forced to provide work guidance to those members of the family, who are often not able to it. As a result, workers with the right skills, knowledge and ambition, but are not members of the family or leave the company and go to another, or find yourself another job in the same firm, and do it only for wages. In addition, small companies are generally not able to provide its employees the same interesting challenges and attractive prospects, which opened in abundance in large corporations. To summarize now it is very important that every head of small business must be competent and qualified. They should predict and foresee their prospective opportunities, which influence to their business. In the other hand, they allow not only to timely and efficiently manage the current business but also to predict developments and accordance with the developing strategies, policies for the organization. Therefore, management science develops its theory of the contents of which are laws and laws of the principles and functions of forms and methods of target activities, people management processes. In fact, all the small businesses that are successfully functioning in which well-run management can detect features as security, adaptability and profitability. Enterprises, the establishment of an efficient production process, low cost, high-management relations that benefit associated with the events. «Controlling», this of course means that the concept of decision-making. Controlling belongs to all spheres of human activity. Also, one of the most important sectors of the knowledge management is the management of financial activities. Business finance management — financial management activities of the company, the proceeds from the sales and distribution facilities in key areas of financial management. The main activity of the enterprises of small business and private entrepreneurship is one of the areas of financial management. Financial companies management — means of financial resources and capital management. Financial management — a complete system of measures aimed at achieving the objectives of the financial management of enterprises. Financial management — clears laws on the one hand, and the specific role of the governing system, on the other hand is a part of the overall management of the enterprise sector. Clearly, financial management and at the same time managed to play as a manager. The process of liberalization and economic reforms to increase the income of small businesses and private enterprises, and plays an important role in the development of effective management of its finances to use. Because the transition market economy, private entrepreneurship, small business development, the formation of a class of property owners, to create a competitive environment in the markets are filled with goods, the elimination of unemployment are the major challenges facing the country. Based on the above, it can be said that the small business and private entrepreneurship on the financial aspects of this small but if you need money, which requires a simple but profound and deep knowledge of the process is a micro process. Uzbekistan under the leadership of the head of State has carried out huge work to update and reform the country, achieving stable and sustainable growth and macroeconomic balance of the economy. The President of Uzbekistan Islam Karimov outlined the task at the session of the Cabinet of Ministers of Uzbekistan dedicated to the socio-economic development in 2015 and the most important priorities of economic program for 2016, to ensure this year`s GDP growth at 7.8 %, the volume of industrial production — 8.2 %, agriculture — 6.1 %, retail trade turnover — 14 % and services — 17.4 %. It is planned to direct investments to US$17.3 billion to development, modernization and structural reforms in 2016 with the growth rate of 9.3 %, of which over US$4 billion will be foreign investments with the growth rate of 20.8 %. Analyzing progressive advancement of the country, I would like to note that thanks to the measures taken the share of small business and private entrepreneurship in gross domestic product has risen from 31 % in 2000 to 56.7 % at the moment, or 1.8 times. In this area now produces a third of 98 % of industrial and agricultural products. It employs more than 77 % of the total employed population. All of this reflects in international reports, In particular, the World Bank’s «Doing Business» criteria such as «support for new business» and «loans to small businesses», Uzbekistan is currently ranked 42nd in the world. As noted in the World Bank report, Uzbekistan is currently among the top ten countries in the world, which in the last year achieved the best results in improving the business environment for business. According to the rating of authoritative World Economic Forum, Uzbekistan is among 5 countries with the fastest growing economy in the world by the end of 2014–2015 and forecasts of growth for 2016–2017. At the end I want to say that, those affords which have been done by our government were very efficient. Also statistic number can prove it. 21st century is very changeable. New technologies, products, innovations become old much fast like information. But people want even greater and greater newness. Management in small business is developing up to that moment when both alternative and natural resources end. It means that never. Managing from resources will be easier, even with developing of environment. Because worldwide inventions and discoveries are near.

References:

1.              Светник Т. В. Менеджмент на малом и среднем предприятии. — Иркутск: Изд–во БГУЭП, 2007–175 с.
2.              Малые и средние предприятия. Управление и организация / Под ред. Пихлера Й. Х., Пляйцнера Х. Й., Шмидта К.–Х.: пер. с нем. — М.: Международные отношения, 2002. — 280 с.
3.              Менеджмент в малом бизнесе: особенности и нюансы. Марина Хайбулина Business Excellence #6 2010 Менеджмент 48–50 с.