Most businesses in Georgia are small and medium-sized enterprises (SMEs), accounting for 94% of businesses and 43% of all jobs. Yet they contribute only 18% to the country’s GDP, meaning there is significant room for growth if ways are found to unlock and tap into their potential.
Both the Georigan government and the European Union realise what is at stake, which is why the EU has set support for SMEs as a priority in Georgia, where its EU4Business initiative works to break down the obstacles facing SMEs, such as limited access to finance, legislative burdens and difficulties in entering new markets.
EU4Business does this by providing funding opportunities, support and training to help small businesses realise their full potential. The support is delivered jointly with other organisations such as the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB).
One company that has benefited from EU funding and EBRD support under EU4Business is Memogram, which offers an innovative photo shooting and printing service. EU4Business support has helped Memogram to expand its business, and in particular to improve its service, and as a result to increase turnover.
Memogram offers customers with an easy and innovative photo-printing experience, allowing them to shoot, upload, transfer and print photos in a matter of seconds.
But the EBRD also helped Memogram to offer another product to customers. The Photorator is an environmentally-friendly photo-printing kiosk, an innovative new device that combines advertising and fun, not only in the Georgian market but abroad, where the company also sells its photo-printing kiosks.
The founder of Memogram, Gabriel Meliva, said that both his projects, Memogram and Fotorator, benefited from consultancy services facilitated by the EBRD’s Advice for Small Businesses programme and supported with €7,000 by the EU. With this support, Meliva created the webpages for the company. Moreover, their project received funding from additional donors, and as a result, the company was able to build 15 Fotorators and export them to international markets. Meliva is actually a financial specialist by profession, and had been working at a bank for more than eight years, but when he realised that his personal business idea had the potential for development, he left the bank and moved into business in 2014.
“I invested all my personal savings worth GEL 10,000 in these businesses and in that period there was very little competition in this sector on the Georgian market, as there was only one company that was offering a similar service to customers, but it was not interactive. I was sure that by offering more interactive and innovative services in the photo service industry my business would develop,” he said.
With only three years of market activity, Meliva says the company has provided more than 600 photo shooting services. “Initially, we were might have provided two or three photo shooting services in a month, but now we have two or three in a day. The uniqueness of our service is that you can shoot, print and share the high quality photos simultaneously.”
For further development, Meliva believes there is need to offer more innovative and new services to customers. “There is lack of professional staff on the market, moreover we buy the materials from abroad, and this kind of difficulties hinder small business growth,” Meliva said.
EU Ambassador to Georgia Janos Herman said the EU has been supporting economic reform in Georgia and small businesses in particular for years, adding that EU4Business programmes provide tailor-made support to various types of companies, and in various sectors of the economy.
“EU4Business brings together a range of EU-funded programmes all working towards this objective: to boost SMEs and allow them to develop their full potential so they can take advantage of the opportunities offered by free trade with the EU. These programmes make it easier for small businesses to get loans, they help them to develop and expand, to prepare for export and access new markets for their goods,” the Ambassador said.
Severian Gvinepadze, the Principal Manager at EBRD Advice for Small Businesses in Georgia, said that at the EBRD they often reiterate that small and medium-sized businesses are the backbone of a healthy market economy. By firmly believing so, they understand that along with access to finance, the SME sector needs consistent consultancy and technical expertise to further develop and grow.
“EBRD’s Advice for Small Businesses team connects Georgian SMEs with local consultants and international advisers to make a real change - transforming a huge range of businesses to fully enjoy local and international opportunities such as free trade with the European Union,” Gvinepadze explained.
And the figures speak volumes: last year alone with EU4Business funding ASB Georgia was able to implement more than 100 advisory projects with local SMEs. Latest statistics show that 84% have seen an increase in their turnover, while 66 % created new jobs, according to the figures from the EBRD.
“With every year, the demand for our services increases and we are happy that we do not only support the SME sector, but assist the development of the consultancy industry in Georgia through targeted training modules and educational courses,” he added.
Working with partners like the European Bank for Reconstruction and Development or the European Investment Bank, EU4Business – previously called the SME Flagship Initiative - has been active in Georgia since 2009.
In that time, the programme has provided financial support to more than 63,000 enterprises in the country, disbursing more than €700 million to SMEs. Businesses supported by EU4Business range from hazelnut growers to tourist enterprises, from wineries to dental surgeries.
Designed to complement a company’s corporate culture, Goodforyou supports the wellbeing of employees by promoting healthy habits in a fun way. The EBRD’s and EU’s support to this company provides another example of how a company can explore and develop new niche of operation.
Goodforyou obtained business advice worth €10,000 funded by Sweden and the EU within the EBRD’s Advice for Small Businesses for working with a consultant and creating its webpage, content development and digital marketing.
Surya Kumari, the founder of the company said that the basis of the business idea was today’s hectic era of multitasking between work, personal life and world problems that often leaves us stressed out and overwhelmed.
”Designed to complement a company’s corporate culture, goodforyou.company supports wellbeing of company’s employees through promoting healthy habits while keeping it fun,” Kumari said.
A 3-month challenge, tracked by wearable technology, encourages teams to take 10,000 steps daily and guides into the virtual tour around Europe. The program engages, motivates and rewards participation to ensure a real sense of achievement throughout the duration.
Goodforyou.company’s founder now works on creating packages to offer the product to potential clients. “We are in the process of testing the products, defining the price of our corporate wellness programme. The target audience could be the middle level managers of the companies,” she explained.
EU4Business also provides support in the form of loan guarantees to local banks, which then allows banks to offer more loans, and with better lending terms and conditions, to local SMEs. This allows businesses to get the investment they need to grow, for example to buy new machinery that will bring down costs and allow them to be more competitive, both on home markets and for export.
And it’s not just about money: SMEs can call on expertise as well as credit, for example to change the way they manage their company, or to introduce new online marketing platforms – not only will the project provide the right consultant, but share the cost. Other projects provide training for entrepreneurs, networking opportunities, help to take part in trade fairs and export forums, they help companies to adapt and boost their quality to meet to the standards and requirements for EU export.
Some SMEs believe the application procedures for receiving support from donors is very difficult. But Gabriel Meliva encourages all SMEs managers to take part, insisting that the procedure are very simple and not to miss this opportunity.
The applicant starts by filling in the specific Application Form (ENG GEO) providing all the necessary information on the project aims, goals and content, with particular identification what kind of consultancy service they would like to be provided.
The examples of Memogram and the Goodforyou demonstrate that what yesterday seemed impossible, today has become real and tangible for SMEs in Georgia, thanks to EU4Business and its partners.
Author: Tamar Khurtsia