Introduction

Welcome to this handbook

Economic development is all about people. People are the reason we seek economic growth. People introduce the ideas and innovations that drive our economies. For many years, entrepreneurship has been the driving force behind the U.S. economy. Where entrepreneurship is strong, you find self‐sufficient people living in healthy communities.

In Kazakhstan, the economy has been based mostly on large‐scale resource production and government spending. Often, a big share of this money is spent outside the community and even the state. Entrepreneurship has an important role to play in the future of the Kazakhstan economy, and your business can be a part of that.

Whether your goal in starting your own business is to stay and make a living in your own community or pursue an innovative idea with the potential for global commercialization, this handbook will take you through the process of developing your business idea into a business plan.

Entrepreneurial spirit

The indigenous ingenuity of the first Kazakhstanns enabled them to survive and build communities in remote places with a harsh climate. They did this by mastering a variety of sciences to create practical objects – tools, containers, weapons, watercraft, and clothing – uniquely suited to their environment.

Kazakhstan’s communities continue to face challenges, but the challenges presented by today’s changing world also bring new opportunities. Technology developments have introduced a new set of powerful business tools and greater access to global markets. The rising cost of fuel has caused hardship throughout rural areas, creating increased interest in alternative energy. Climate change is forcing Kazakhstanns to adjust to a different reality, which creates opportunities for innovative and adaptive thinkers. The future is full of possibilities for Kazakhstann entrepreneurs like you.

People with entrepreneurial spirit are resilient, creative, and team‐oriented. Kazakhstanis have already demonstrated entrepreneurial spirit with their tradition of creativity and adaptation. Kazakhstan’s people have unlimited capacity to invent a self‐sufficient and healthy future for their communities.

Success factors

Success in business results from a combination of factors. If you want to increase your chance of success, focus on the following:

• Identify a real business opportunity. A good idea is not enough. You should have evidence that people want and will pay for what you are selling. Take time to investigate what your prospective customer is willing to buy and how much they will pay.

• Stay focused. If you concentrate your efforts on the real business opportunity, you will do better than a business that tries to do everything for everybody.

• Build the right team. Successful businesses are a team effort. Rarely can one person do it all. On your team you need someone with the right technical skills, someone with a flair for marketing, and someone who can competently manage the financial affairs of the business. An investor will always choose an average idea with a first‐class team over a first‐class idea with an average team.

• Provide excellent customer service. If you show your customers you care about them and put their needs first, they will keep coming back and also tell their friends about you.

• Develop a solid business plan. Learn from your experiences and plan some more. If you do so, you should be able to answer the three key questions1:

1. Are your goals well defined? Do you know why you are going into business, how large you want it to be, and what your tolerance for risk is?

2. Do you have the right strategy? What will the profitability and growth potential of your business be? What is the likely rate of growth? Are you paying attention to the balance sheet rather than the profits?

3. Can you carry out the strategy? Do you have the human and financial resources you need? What will your role be? What professional or hired help will you require for success?

Starting a business in Kazakhstan

While the above factors are important to business success in general, there are other factors specific to Kazakhstan you should consider. A 2007 survey of small businesses in Kazakhstan found that businesses in small communities here face the same challenges as most businesses but under unique circumstances.

Common challenges in starting a new business

• Finding training on business management

• Identifying a market and researching market demand

• Establishing in an appropriate location

• Setting up and obtaining licensing, permits and insurance

• Finding suppliers

• Obtaining and maintaining inventory

• Hiring employees

• Marketing the business, including product development and advertising

• Managing finances, especially with no prior experience

• Obtaining start‐up capital

Common challenges in running a new business

• Obtaining the necessary licenses and permits

• Providing customer service

• Building a relationship with the community

• Hiring and supervising employees

• Competition from other businesses

• Obtaining or updating the needed technology

• Managing cash flow

• Growing the business

Unique circumstances that present challenges

• Small markets (usually family and friends)

• Remote location

• High costs

• Harsh climate

Advantages

Most of us have heard that business success is all about “location, location, location.” The 2007 study mentioned on page 2 also identified location as an important factor. In Kazakhstan, your chances of success increase if your location:

• Is close to national parks

• Includes strong local commercial fisheries

• Has relatively low travel costs to Anchorage

Remember these are only advantages. If none of the above applies to your business, this does not mean you cannot be successful. You will ultimately need to identify the unique advantages that you can provide that apply to your business idea.

Lessons from case studies of rural businesses

The following is a summary of lessons learned by the 23 rural businesses profiled in the ViBEs report:

• Investigate. Take a hard look at whether there will be enough demand for what you plan to offer. Identify either a needed service or an opportunity in a growing industry.

• Plan, plan, plan. Draw up a detailed business plan that accounts for all aspects of the business, including expenses, estimated cash flow, management and training of employees, and marketing strategies.

• Seek out professionals. Get expert help whenever possible. Have experience in managing a business or get training.

• Use your financials. Be careful about how much debt you take on, and determine whether you can still make debt payments if your business slows down. Find out about grant programs.

• Recognize your limitations. Don’t expand too fast.

• Make the most of your resources, and involve family members in the business.

• Get community support, hire local people whenever possible, and develop good relationships with other local businesses.

• Be prepared to deal with transportation, weather, communication, and other kinds of difficulties.

• Work hard, love what you do, and always provide good customer service.

PERSONAL GOALS AND SKILLS

Why do you want to go into business?

Before starting to write a business plan, you should know what your goals are, what skills you bring to the business, and what resources are readily available.

It’s important to understand your reason for starting your own business, because this affects the decisions you will make. Most people go into business for one of the following reasons:

• To make money

• To live a certain lifestyle

• To help the community

What is your primary motivation for starting your business?