Monday, August 30, 2004

The nature of retail business failure in central Kyiv has changed. In the middle and late 1990s, the barrier to entry for a startup was, for the most part, created by governmental and non-governmental entities. Business success was just in opening for business and staying safely within the operational parameters that local authorities would allow. Such mistakes as aligning with the wrong mafia entry or going through business registration with the wrong governmental authority were often critical. The business that did navigate these gates successfully often proved very successful. Once launched, these businesses tended to be solid long term investments. Even many that had major operational handicaps proved successful. An example of this is “Arizona’s”, a long time favorite restaurant which has a very bad location. It is well away from the center of the city and, for a long time, well away from any other restaurant. It has proved to be very successful because it featured, and still features, good food and service at a western standard. Uncle Sam’s restaurant, currently “Sam’s Steakhouse”, also fits into this model.

Currently, retailers and restaurants have many fewer hidden bureaucratic barriers and fewer random mafia hands to feed. Their success, and often failures, are more based on there ability to manage a business. Retailers with bad locations and bad service now fail. Retailers with in-appropriate merchandize and the wrong pricing model (generally too high prices) fail. I have no sound business statistics to back this notion up, but I would guess more retailers fail now that in the 1990s. This is certainly true as a percentage of retail startups. There are still major gaps in the Kyiv retailing scene but these gaps are being filled.

This shift of the nature of business failure is a sign of the growth and normalization of the local economy. This is a small business condition. In larger business, the once dominant large scale industries are now waking up. The bureaucratic burden is now focused on these dinosaurs.


At 11:48 PM, Blogger Terry said...

This is just a test


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