by Viktor Andrukhiv (pictured)– Ukrainian entrepreneur, co-founder of Fibermix and Savex Minerals
The war in Ukraine has been a big challenge for businesses here. Entrepreneurs have had to change the way they do things quickly and take on new risks. Last year, the Ukrainian economy suffered its biggest loss ever – it got 33% smaller. But things are looking up: The National Bank thinks things will slowly start to get better in 2023.
Even though there are some problems, there are also good things happening. It’s a good time to start a new business or make an existing one bigger.
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What is the advantage of the Ukrainian market?
How Abundant Resources and Low Competition Can Lead to Success
Even though Ukraine has been facing ongoing military threats and population migration, it still holds great investment potential. This is due to its strategic location as a transit corridor for trade, its low-cost and skilled workforce, and advancements in digital technologies.
Ukraine has also made recent strides towards EU accession, such as the introduction of a “transport visa-free” regime with European countries, lifting tariffs for industrial product exports, and abolishing quotas for agricultural products.
One major advantage of investing in Ukraine is the lower level of competition compared to many other European countries. Unlike some neighboring markets, Ukraine is not saturated with large global brands, providing more opportunities for growth and development with smaller capital investments.
- Ukraine’s Economic Growth Spurs Investment Opportunities and an Increased Project Count
Investors are now looking at the Ukrainian market with interest. In just the last three months of 2022, the Ministry of Economy received over 500 requests and offers to invest in Ukraine, and that’s just through one investment platform.
It’s expected that about six months to a year after the end of active fighting, there will be a surge in investment in Ukraine. Large projects will appear on the market, which will in turn allow for the development of smaller ones that provide related services.
How Small Capital Investments Can Boost Your Profit Margin
In Ukraine, companies can make more money than in other countries with the same amount of investment. For example, a big company with $100 million can either buy stocks and earn 2% or put the money in a European bank and earn 0.5%. Or, they can invest the money in a business in Ukraine and make 20-30% or even more. These returns are better than what most companies can get in Europe, but there are also more risks.
So, if someone is trying to decide whether to invest a little bit of money in Europe or a lot in Ukraine, investing in Ukraine is better. If someone already has experience in the market and wants to expand their business or start new projects, now is a good time to do it.
Seizing Opportunities During a Temporary Economic Slowdown: Exploring New Projects
Right now in Ukraine, there’s a good chance to start a successful business. Even though the business environment is not so good at the moment, new projects have a chance to stand out.
Because of the war, some big and medium-sized companies had to change the way they do things, like making less stuff or working in different places. More than 100 companies in Ukraine had losses in 2022 because of the fighting. Also, according to a survey of companies done by the European Business Association, 46% can only work in certain places, and 10% have stopped working completely.
This means that smaller businesses now have a chance to work in places where they couldn’t before.
Starting a business with the goal of growth – is it the Right Move?
When the fighting in Ukraine stops, it will become more expensive to start any new projects. However, some entrepreneurs have been saving money and waiting for the right moment to launch their projects. They can start their projects now, but on a smaller scale, to reduce costs and risks. This allows them to gain valuable time to gather information, assemble a team, test their product in the market, and build a reputation. When the time is right, they can scale up their project and launch it fully.
For instance, Savex Minerals produces dry building mixes called “Mazanka.” They can currently produce 300 tons of finished product per month, but it requires a lot of money and resources. So, they are currently producing 30% – 100 tons. When the demand increases, they will be prepared, know the processes, and have a recognizable product. It’s easier to develop a project on a smaller scale than to start from scratch when it’s more expensive and the competition is higher.
Should you start a business in Ukraine? Here’s what you need to know
Ukraine has a lot of potential for foreign investment, but starting a business here is not easy. The government is working to attract investment and improve the legal framework for business, but the partnership between the government and the private sector still needs work. If you rely only on the government for support, one mistake could ruin your business and put you in debt.
Trying to do business with the government without experience can also be risky. Companies with experience already have relationships and understand the system. Trying without experience is likely to lead to failure.
Investing all of your resources into someone else’s management is also risky. While there are ways to fund startups, giving everything to someone else can lead to problems and a failed project.
Despite the risks, it’s a good time for entrepreneurs to enter the Ukrainian market while the competition and costs are still low. This is a chance to test ideas and make a name for yourself so that you can confidently grow your project in the future.
