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HUMAN RESOURCES

After the Revolution, an Embarrassment of Niches

An American entrepreneur discusses his start-up in Prague and some of the hurdles it faces and why.
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PRAGUE, CZECH REPUBLIC. I make a living as a kind of entrepreneurs' clerk of the court, registering the births and deaths of companies that have sought their fortunes here. Since 1991 my company, Resources, has provided crucial but scarce information to the Czech business community. Our core product is a list of all the foreign companies in the Czech Republic. Fifty percent of the names and addresses change every six months. The cause of death usually reads "bad timing," "lack of focus," or "employee turnover." I shiver to think that my company could end up among them.

Timing has, so far, saved my business, just as it has killed many others. When Resources started, Prague had no phone directory. The city also had no fresh vegetables in winter, no sponge mops, no fast food, no colorful advertising, and few copy shops. But phone numbers mattered the most to me. I was a foreign correspondent in Prague for three U.S. newspapers. After a year of wasting countless hours tracking down phone numbers for my stories, I got so frustrated that I took a three-month break from journalism to put together a phone directory of all the government and business leaders in the country. I wasn't alone in my frustration. Executives of new businesses called me when they got to town, looking for contacts who could help them with taxes or recruiting employees.

Prague has grown a lot since we published our first directory, and so has our business. We now have 15 employees and 8 printed and electronic products. Though the city has grown more sophisticated, it still attracts hundreds of novice entrepreneurs. Prague is inexpensive, especially by European standards. It is relatively cheap to get a trade license. There is a lot of competition in every field; each company is vying for a small piece of the Czech Republic's 10 million population pie.

There are so many opportunities in Prague that many entrepreneurs die from one of two things: a lack of focus or a lack of employees.

Some entrepreneurs try to pursue too many opportunities at once, do none of them well, and are defeated by specialty businesses that take over their markets one by one. Prognosis, the first English-language weekly newspaper in Prague, folded last year in part because the paper could never decide whom it was speaking to--artistic types or business executives. Focus is important in a country where so many holes need to be filled.

Finding dedicated employees isn't easy here, either. The consequences of Prague's 0.3% unemployment rate are staggering. Every company, from the multinationals to the small guys, has to deal with much higher turnover than it would at home. Headhunters call my employees all the time, offering jobs. Someone who quits a job in the morning can have another one that afternoon. Equity options and profit-sharing plans are considered pie-in-the-sky promises by employees who are offered double their salary and a car by another company.

When I arrived six years ago, a favorite pastime of expatriates was discussing the missing comforts of home and imagining how well they would sell in this market. Now the topic of conversation is "How do you keep your people?" The bureaucracy, accounting system, high tax rates, and language are also difficult to deal with, but keeping good employees is the greatest hurdle a small business faces in Prague. I often laugh at the thought that it is capitalism that has brought the communist ideal--full employment and power to the workers--to Prague.

--M. B. Christie

Last updated: Oct 1, 1996




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