Nurturing Martin's babies

IT is well known that small- and medium-sized enterprises (SME) are the backbone of an economy. But for the SME sector to develop in Slovakia, existing businesses and potential entrepreneurs need help and guidance to realize their potential.

IT is well known that small- and medium-sized enterprises (SME) are the backbone of an economy. But for the SME sector to develop in Slovakia, existing businesses and potential entrepreneurs need help and guidance to realize their potential.

A Flanders (part of Belgium) initiative - The Martin-Flemish Business and Incubator Centre - is lending just such a helping hand. Headquartered in Central Slovakia the initiative nurtures creative entrepreneurs in favourable conditions to make sure they get a good start.

"The main aim of the incubator is to help small- and medium-sized enterprises to start and develop their companies. The second main benefit is, of course, creating new jobs," Jozef Bernát, executive manager of the Martin-Flemish Business and Incubator Centre (MFBIC), told The Slovak Spectator.

The main advantages that MFBIC offers to budding businesses are cheaper rents and much-needed advice on how to go about realizing and developing good ideas for small- and medium-sized companies.

Rent at the centre is levied on a sliding scale. "In the first year, the entrepreneurs pay Sk1,200 [€31.45] per square metre, the second year it is Sk1,450 [€38] and the third year Sk1,700 [€44.55]. Apart from that, entrepreneurs pay fees for the power they use for production," says Bernát.

Also located at the Flemish centre is the Martin branch of the state regional business and incubator centres network (RPIC). It works together with the Flemish centre, advising and giving information on managing a company, accounting and tax.

Business plans

According to Bernát, a good business idea is the key to getting accepted into the Flemish centre. A well-prepared and realistic business plan is one of the main criteria for admission.

Apart from that, the entrepreneurs must have held a sole proprietor's licence for up to one year or make a promise to create new jobs at the centre.

After being given permission to establish a business at the centre an entrepreneur has to agree to stay there for three years.

The idea to establish a business incubator in Slovakia first arose in 1996. The Ministry of Flemish Community had already established other such incubators in other countries in Eastern and Central Europe.

Feasibility study

Three Slovak regions - Bratislava, Trnava, and Martin were considered as potential locations for the incubator. Following a feasibility study, Martin was chosen as the best site.

The city of Martin donated the land for the incubator centre free of charge - a very generous start since the two-hectare site was valued at Sk10 million (€260,000).

The Flemish side chose the land and offered 19.5 million Belgian Francs for initial investment in the project. The pre-accession European Union Fund PHARE added another Sk10 million.

"These were just the initial investments. After many rounds of talks and amendments to the original contract, we succeeded in realizing an overall investment with a value of Sk46 million [€1.21 million]," Bernát told the Spectator.

The Flemish centre was established in a form of a limited liability company. To pay for its up-keep the centre had to break even.

According to Bernát, in 2004, 10 companies were located in the centre under "long-term business care". Three companies were excluded because they were not financially disciplined. 50 jobs in total were created in 2004 at the incubator, mainly in the clothing industry.

The future

However, the future of MFBIC is not entirely clear. Decisions have to be made as to whether the centre willl continue to operate in its current form.

"At the end of the day, the incubator might be transformed into an NGO 70 percent owned by the city of Martin and 30 percent owned by RPIC Martin. However, it is still not clear, in what form the centre will operate in the future," Bernát said.

Only recently, the centre, in cooperation with the city of Martin, succeeded in its application for a financial grant to build a production hall that will be fully-owned by the city of Martin. The Flemish centre thinks a hall of at least 800 square metres is vital for the future health of the project.

Bernát hopes that the existing centre and the hall can be at least 80 percent occupied. "Currently, 85 percent of the centre's capacity is in use," he added.

Bernát thinks the Flemish centre is unique as it works as an independent business unit. The centre pays for itself from its own activities so does not need aid from bodies such as the National Agency for Small and Medium Enterprise Development (NADSME).

However, Bernát admits that were NADSME or the Economy Ministry to offer extra funding, he would not turn it down.

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