Karel Havlíček


Small enterprises now no longer slouching


Karel Havlíček, Chair of the Board, AMSP ČR

Since 2001 the Association has offered an open, apolitical platform for SMEs, the self-employed and various groupings and associations. It is the main representative of the Czech Republic’s broadest business segment and apart from legislation, export, innovation, education, and financing of SMEs it has special teams and projects which focus on family businesses, handicrafts, start-up businesses, local producers and growers, small shops and gastronomy establishments, women in business, businesses in rural areas, church businesses and third-age businesses.

They say that small and medium sized enterprises are the backbone of the economy… Staying with the medical metaphors, what condition is the Czech backbone in?

Strong, occasionally sore, but no longer slouching. I’ve been defending the interests of small and medium sized companies for almost twenty years and if there’s something that makes me happy then it’s the growing confidence of entrepreneurs. In contrast to the past, entrepreneurs no longer stand in front of anyone with cap in hand, believe in themselves more and can advance their interests, commercially and legally, against the state, banks and large corporations. So we don’t just talk about state support, take the example of the dispute between small Hyundai dealers and the importer which was brutally exploiting its position. Once we began co-ordinating the complaints of these small companies within our association, we managed to block the Hyundai Corporation five times in a row in all the courts despite their corporate threats, and huge legal and financial dominance, and they ended up disgraced and they’re going to pay for the consequences. That couldn’t have happened ten years ago; small companies then would never have got into that kind of dispute.

Small and medium sized enterprises need to ensure maximum efficiency to withstand a difficult competitive environment. One might say this is one of the few environments where ‘common sense’ has been preserved. In this context I appreciate your statement that: “We cannot have massive wage growth, zero unemployment and high investment from companies at the same time…”

In contrast to multinational companies, small firms work on the basis of fast management of changes, bare numbers and healthy efficiency. Large corporations are under pressure from investors, managers frequently politicking and seeing management rewards on the horizon. The small entrepreneur has to see much further; his objective is not short-term performance but long-term survival and asset preservation. If the state acted like a small family company in its speed, decision-making and strategic planning, we would have progressed much further today. Unfortunately it acts like a large corporation and instead of the interests of society it focuses on the interests of political secretariats. A typical example here is the recent failure of Prime Minister Sobotka. I don’t mean the sacking of the finance minister here; he is fully entitled to do this. I’m referring to his first attempt to dismiss the whole government taking the whole country and government hostage because he was unable to deal with a common political dispute between two key leaders in government.

A generational changeover is beginning to take place in many companies. How prepared are small and medium-sized businesses for the succession?

We’re experiencing the first change in generations, so this corresponds to the situation. The whole process of changeover takes place rather intuitively, so the good news is that things are improving. Our association is playing a crucial role. A few years ago, our association created the Family Business platform, bringing together a few hundred of the most important family companies and we are working with them systematically at a regional and nationwide level. We are creating legal support for them, undertaking mentoring, establishing academies for successors and in particular we are continuing to encounter and undertake benchmarking. Furthermore, we are declaring next year Family Business Year. I’ve got a good feeling about it; companies are beginning to realise that changeover is a complex process which takes a number of years during which time they must anticipate economic, legal and psychological variables, never mind consider correct timing. If I’m going to transfer a company to a successor who is over fifty years old, I cannot expect him to give the business the energy and novelty it so needs.

Staying with the young generation, I’d like to quote another statement you made that I noted: ‘If we keep crying over bureaucracy, it’s no wonder the young aren’t becoming entrepreneurs’: Has the youth’s position on doing business changed over time? From a media perspective it would seem that large corporations are not in fashion with a growth in interesting start-ups occurring instead.

You’re right, and I’m really pleased about that. But first to the crying. As the main representative of small business, we are always pushing the government, complaining and perhaps sometimes exaggerating a little. That goes with the territory; otherwise we wouldn’t get results, it’s like in trade. But there are limits; I don’t want us to become a nation of cry-baby businesspeople who can only complain. Our business environment is not bad and business is not the last option for the incapable, but the first chance for the best. You’ve got to keep trying, fight and not rely on some kind of extra support. That’s what doing business is all about and not everyone can survive. We have to show the youth the opportunities, and not just frighten them over bureaucracy. They must see problems as challenges which they have to deal with every day as entrepreneurs using economic tools, and not by demonstrating on Wenceslas Square or setting up business unions as someone tried recently. That’s a debasement of entrepreneurialism and a return to socialism.

Let’s go back to bureaucracy and the civil service. Are you optimistic, or resigned? Complaints can be heard over its growth at every conference, at every specialist or even social gathering… What’s your perspective here?

My role is to continuously fight against it; if I were ever to think of resigning myself to such problems then someone else would have to do it instead. But this fight has got to have some parameters and must seek results, not just media visibility. The level of regulation here, like in the EU, is unprecedented, and just can’t be compared to the United States, for example. But careful; the level of administration in America, for example, is much worse than here. The objective must be to reduce regulation and be uncompromising in implementing computerisation into all areas. But in doing so we’ve got to ignore and avoid the rehashing of mantras by some about not being able to cope, or implementing Big Brother. It works in Scandinavian countries because they just did it, nobody really worried about it and today they are a model for the whole world. And here, take the infantile discussion over electronic sales records for example… The truth is that in Estonia, for example, computerisation has been done to result in data sharing with the country a de facto internet platform and everyone saving time and money. Here, we’re computerising such that instead of using pen and paper we’re doing the same with a computer mouse, but that isn’t saving time…..

A relatively new topic in the Czech Republic is co-operation across sectors, specifically between the academic and private spheres. I work for Charles University’s Commercialisation Council. How do you perceive co-operation with science and the academic sphere? Co-operation is going well with large corporations, but as yet medium-sized businesses have not taken up this opportunity… What can be improved on both sides?

I’ve got to be objective here and compare the situation with previous years. Twenty years ago practically no small company co-operated with a university or research organisation, ten years ago this happened exceptionally, but today it is fairly common for many companies. European and national resources released to enable co-operation between science and business have meant that tens of thousands of small companies have been able to start co-operating with scientists. That is undoubtedly positive. Another matter is what results it has given us. And that remains a problem. Companies and research institutions still have a significantly different idea of what co-operation should bring. The fault lies with both sides. Small companies are impatient and unable to see the project from the perspective of a researcher, and they also don’t have sufficient further resources. And scientists feel that their research is like a golden bird in a gilded cage and it is only the incompetence of entrepreneurs which has not turned their institute into a second Cambridge, and they are unwilling to admit that their results may not be all that extraordinary. It’s a long game, and we need one more generation for it to change.

By Linda Štucbartová