Small new work opportunities to people who may not

Small
and medium entrepreneurship plays an important role in the country’s economy.
SMEs may not generate as much money like big companies, but they are
significant component to measure the strength of the country’s economy. Small
entrepreneurships present more new work opportunities and serve more people
than big companies. In developed countries, SMEs provide 95 % of total
enterprises, 50 % of employment, 40 % of investment, 50 % of total
production, and 30-40 % of total exports. Small entrepreneurship brings
growth and innovation to country’s economy, and contribute to developing of
local economy. They also help to stimulate the local economic growth by
providing new work opportunities to people who may not be employable by big
companies. They bring new solutions for existing ideas and meets tiny needs
of the society more than big companies. Small businesses are also a great
deal for big businesses in the same community, and they play a crucial role
in completing the various business functions and outsourcing of large
corporations. Because of these reasons, all countries attach great importance
to the development of small businesses. In addition, small businesses have
many advantages over large corporations. So, many small businesses have quick
response and adaptability to changing economical climates. Because they are
often very customer-oriented. Many local customers are loyal to their
favorite small businesses in the midst of the economic downturn. This
commitment indicates that even small businesses can even boost local
economies and continue their economic activity even during the economic
crisis. SMEs earn less income than large corporations, but are less likely to
suffer during the economic crisis. Some of the small businesses continue to
grow rapidly over time. For example, companies like Adidas, Puma, and Nike,
which began functioning as a small business, have grown to become major
global companies over time. Small businesses, which are transformed into
large enterprises, remain largely in a society where business has been
created, and it can help to provide employment and stimulate the local
economy. Until recent times, the development of entrepreneurship in
Azerbaijan could not be considered satisfactory. But in recent years, small entrepreneurship
has also grown substantially in Azerbaijan. Entrepreneurship is a topical
issue lately. Many countries also take important measures to attract
entrepreneurs and develop small business communities. But how do you do it?
There are a lot of ways to develop entrepreneurship in the country such as
government leadership and private sector. Governments are important factor
for development of entrepreneurship inside the country. The first task of the
government is to create a legal basis for political stability and development
of entrepreneurship in the country and take the necessary measures to prevent
unfair competition. Because entrepreneurship can not develop unless these
conditions are met in the country. Governments also have some other tools to
stimulate entrepreneurship. Firstly we can give example taxes. Many countries
implement new taxation policies that support modernization and innovation. It
is implemented in countries with both developing and advanced economies.
Here, two trends focus on taxation in the private sector for innovative
activities. The first trend directs to eliminate the problems that hinder
trade across countries and regions. ?n some developing countries such as
Serbia and Croatia government exempt entrepreneurs from taxes for some
period. This method encourage and stimulate entrepreneurs, especially small
and medium entrepreneurships. For example government should exempt
entrepreneurs for first 5 year. I think it will tempt people to join to the
entrepreneurial activity and it will lead to growing and stimulating
entrepreneurial environment. Besides, government will get more taxes after
some years when entrepreneur’s tax exemption period finish. It will also lead
to future growth of country. The second motivating trend is that, government
can create suitable conditions to involve foreign investment because of
low-cost workforce and manufacturing capabilities. This method will tend to
involve foreign capital and increase employment in the country. These trends,
focusing on customer priorities, has resulted in further acceleration of
economic growth for developing and developed countries. These trends do not
cause any negative results. For these reasons governments will continue to
pursue tax policies that promote entrepreneurship. Some countries which are
successful in entrepreneurship initiative tend to set up a tax platform
covering a range of corporate owners and investors such as: low taxes,
industry-specific low tax rates, or tax holidays, a regime of R&D tax
incentives such as credits or deduction. In addition, the government has
various incentive methods for entrepreneurial activity. One of the most
effective ones is government subsidies. Direct subsidies are often targeted
to certain industries that are strategically important. Direct subsidies are
the best way to promote high-risk projects and achieve specific policy goals.
This ensures that the state budget is spent on the best projects within the
scope of the issues determined by the political authorities. In this issue,
the government’s control over the subsidies will result in more efficient use
of those subsidies. For stimulate entrepreneurship, country should found some
organizations which lead to develop entrepreneurship. For example in US Small
Business Administration has played an important role in the construction of
many businesses. According to SBA the person who has a business idea, he
prepare a business plan and submit it to bank. After reviewing the business
plan, the bank submits the project to the SBA. Then, 40 % of the required
capital paid by bank, 50 % paid by SBA, and just 10 % of required capital
paid by entrepreneur. ?t is the great opportunity to develop
entrepreneurship. ?n the US SBA tend to found today’s some big companies such
as “Chobani Yogurt”. That type of organizations tempt government and some
financial intermediaries help to developing of private sector. Banks are at
least as important as government for the development of small and
medium-sized businesses. Many small and medium-sized enterprises in the world
and in our country are failing and can not continue their business due to
lack of capital. Because of this reason the role of banks is indispensable in
the financing of small and medium-sized enterprises. Lack of funds, in turn,
slows down or impedes the use of new technologies in production. When the new
technology is not applied, the first is that good quality products can not be
manufactured, and secondly, cheap products are not available. As a result,
SMEs produce non-quality products, and at the same time, price can not be
lower. In this situation, SMEs fall into an unequal competitive environment
with large entrepreneurs in the market. The main role of banks in this issue
is to finance entrepreneurs on favorable terms and contribute to
entrepreneurship development. In this regard, one of the best things banks
can do is to provide entrepreneurs with concessional loans and low interest
rates. In addition to banks, insurance companies also play a major role in
the development of entrepreneurship. Because insurance companies share risk
with entrepreneurs and contribute to a more secure environment for them In
addition, some companies in the world practice provide credit or lease of
certain technology and equipment. This method provides entrepreneurs with
limited financial opportunities with the necessary technology and equipment
on favorable terms. Leasing financing is longer than bank loans. Thus,
Azerbaijani banks do not issue loans for more than 18 months but at least
three years are required for leasing loans. Financial leasing allows the
lender to simplify the burden of his own tax debts at the expense of rapid
depreciation. Lease payments are recognized as a payment for the value of the
property acquired at the expense of the lease transfer and deducted from the
taxable amount. In accordance with the Tax Code of the Republic of
Azerbaijan, amortization costs can be accelerated to measure the value of
leased property. The leasing business operates as a private sector of
entrepreneurial activity. If leasing is widespread, it can act as a powerful
impulse for the technical supply of production, the reorganization of the
Azerbaijani economy and the filling of the market with high quality goods.
The effectiveness of leasing transactions reflects the improvement of the
financial position of the leasing company in the activation of the investment
process, and the increase in the competitiveness of small and medium
businesses. Another factor that affects the development of entrepreneurship
in the country is the existence of free economic zones. Different types of
discrimination and incentives are applied in free economic zones such as
reduction or cancellation of export-import duties, simplification of foreign
trade transactions, and etc. It encourages tax incentives for certain types
of activities in free economic zones. These discounts can cover the tax base
and its separate components, the level of tax rates, permanent or temporary
deductions from taxes. At the same time, free economic zones apply financial
incentives covering different forms of subsidies and administrative
incentives such as enterprises registration, simplification of entry and exit
visas of foreign citizens. As a result, the importance of entrepreneurship
and the impact on the economy in any country is undeniable. Therefore, a
number of measures are being taken in the direction of development of
entrepreneurship in our country. But we should do more. The development of
entrepreneurship in our country is not simply a matter of financial factors.
In addition to financial factors, it is also important to increase the
business literacy of people. At present, some business case competitions in
our country have a great role in raising students’ business literacy and
business environment. At present, all steps taken towards the development of
entrepreneurship play a crucial role in the further development of our
country.