Essay On The New York Times’ article ‘Building a Start-Up Culture in a Broken-Down Economy’

Management and Organization

Professor: Karen Haley Allen

Essay On The New York Times’ article ‘Building a Start-Up Culture in a Broken-Down Economy’1
By Elizaveta Bogadist-Kataeva

September 2015

Every crisis disciplines and makes a person more responsible to the costs and searching for innovative solutions for earnings.

In a crisis, entrepreneurs are thriving. After all, where many see problems, they see opportunities. Where many people are afraid of uncertainty, they like risk. When the bulk is drifting, the most successful ones are swimming against the tide. Chaotic markets are the best conditions for entrepreneurs. Half of the companies from the list of the largest companies in Fortune-500 are based in times of crisis2.

Entrepreneurs - these are the people who are either starting a new or accelerate an existing business, they play a central role in the development of capitalism, because they are new products, new production methods, new markets and new forms of organization, speaking thus, as agents of change in the economy and society. So entrepreneurs are promoting several factors acting at the same time, stimulate economic growth.

While journalists around the world in recent years have paid a disproportionate amount of attention to the state of public finances in Greece, the Greek business they didn’t cover often. However, the Greek businessmen are not only existing, but also are very good at doing business.

While members of parliament and the trade unions say that the deal (bailout) for Greece is a humiliating capitulation, a young entrepreneurial class is leapfrogging over old-fashioned business culture.

As well as young Greek entrepreneurs, Russian startupers say they have little interest in the political and ideological debate, but trying to build their own business, despite all external obstacles.

The situation in Greece is very similar to the situation in Russia - an Internet entrepreneur Vasdekis of Travelmyth said that Greece could no longer count on the prosperity based on exports of olive oil, cheese and traditional tourism. Similarly, Russia could no longer count on a comfortable life in the situation with the sanctions of the European Union and the United States, dumping oil prices and import restrictions in the country.

The growth of Russia’s debt and budget sequestration will not help Russia cope with the shortage of income. The fact that the average rate of growth of the Russian economy in 2013-2017 years would be 10 times less than in 2003-2007 (0.7 vs. 7.5%) wasn’t expected by the government: a half a year ago the forecasts expected growth in the coming years by an average of 3.2%. By 2018, the economy will fall behind the plans to increase by 13%3. That means Russia could duplicate Greece’s scenario of several years in a state of recession and fiscal crisis. All that remains of the Russian economy in this case is the hope for domestic economic market and new business.

The theory of anti-crisis solutions4 suggests that small businesses in the crisis should behave more confidently. With the right behavioral tactics, it is able to overcome both competition from big business and the difficulties caused directly by the crisis. Many economists say, both in Russia and in America, about the leading role of small business in the economy.

In working out the anti-crisis tactics small business owner must clearly understand their strengths and weaknesses, then business competitiveness is to become much higher, and its shortcomings are to turn into strategic advantage.

First of all, essentially important advantage is the ability to operate at low annual turnovers. Financial dependence says that big business needs more momentum and thus has a greater expenditure side. At the same time, small business, working at low turnovers, has a small expenditure component.

Travelmyth, the company mentioned in the article, operates almost entirely online and its founders keep an office in an incubator space.
That helps to save money on general and administrative expenses and use them to hire more professional and experienced staff to generate more money for the company.

Another important anti-crisis advantage is the ability to a rapid reorientation. If for a great ship to deviate just a couple of degrees you need to spend a lot of time and high costs, for a small boat it is enough to make a dozen strokes of the oars to swim in the opposite direction.

Crisis always “breaks" the market and a protracted crisis results in its redistribution. The business owner must always remember that no matter how hard the crisis slap you in the face - the bigger the volume of business, the higher the chance to get knocked out.

As we can see from the example from the article in The New York Times, to open a profitable business in crisis is not simple, but quite real.
An important element of success is the ability to change. To do this you need to bring innovations in various fields. This is not necessarily due to the upgrading of equipment, new technology or an expensive project, in my opinion is more important to focus on the creative approach in the work that allows you to open more and more new markets.
The basis of this innovation - the introduction of new products or services that have come to replace the old - especially important to do it faster than the competition, it will provide an advantage in business.

It is also necessary to minimize the costs of the corporate culture, increase the personal contribution to the corporate spirit and not be afraid to sail through the waves of rapidly mutating market.

In today's situation the consumer is focused on getting the price of innovation, which indicates the inability of the population to pay sky-high cost of goods. So maybe work on cheaper goods, their replacement, the creation of new services, but cheap, instead of expensive and old, can give the most unexpected results.

Recession of the economy begins to actively encourage innovative development. For example, instead of selling expensive goods you can offer a lease.
It’s difficult to determine immediately the usefulness of a particular novelty. Innovation doesn’t have to be liked by the seller and have to be liked by the buyer, but it’s the seller who creates it. If you create a team capable to ask the client about their expectations and needs, you can get a strategically important marketing knowledge that can then be transformed into profit.

It should be taken into account that a lot of stress is caused by the difficult economic situation. It‘s therefore necessary to give more time to staff to stimulate the generation of ideas.

If you reduce the expectations of team building in the Seychelles, limit the benefits package (fitness, payment of transportation costs), free coffee in the office, where each employee has a personal cabinet; and allow employees to work remotely, for by saved money you will be able to build a successful business and feel as the iceberg in a situation of financial instability rather than as the Titanic.