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Grantee Profiles

A Eurasia Foundation Grantee Profile

The Tomsk Business Partnership

Tomsk, Russia

Story and Photos by Alan Moseley, Moscow Regional Office

In an unused assembly plant on the outskirts of the Siberian city of Tomsk, Dmitry Tuzovsky is making plans. "On this side we’ll set up all the equipment for making paint and varnish," he explains confidently, pointing to the barren wall inside a cold and half-empty warehouse. "Everything will be up and running by the end of the year." Looking around the warehouse—formerly part of a manufacturing center for instruments used in the Soviet Union’s space program—it would be easy to take Dmitry’s plans for ambitious daydreams.

In Tomsk, however, people who know the 29-year-old businessman know that his plans have a way of becoming reality: on the other side of the warehouse sits a cluster of shiny steel tanks sprouting pipes and gauges, together with a long row of fifty-gallon metal drums. The drums will soon be filled with drying oil for staining and protecting wood and distributed to vendors throughout the vast area surrounding Tomsk. The fifteen employees at Dmitry’s company, Oxidant, currently process and sell nearly $50,000 in paint and varnish every month. For a company that started a year and a half ago as nothing more than an idea, Oxidant is doing impressively well. As Dmitry is quick to acknowledge, none of it would have been possible were it not for the help of the Tomsk Business Partnership and its grant from the Eurasia Foundation.

The Tomsk Business Partnership is an unusual organization. In an era when many efforts to support entrepreneurship and small business come as top-down initiatives from the government or as projects organized and sponsored by foreign aid organizations, the Tomsk Partnership was founded at the grassroots level by fifteen of Tomsk’s more successful entrepreneurs. As Olga Koneva, the partnership’s deputy director, explains, "The founders of the Tomsk Partnership were entrepreneurs who started their businesses at the very beginning of perestroika. They’ve gone through all the different challenges and crises, and today they’re well established. They have good working relationships with our local government and financial institutions. They understand that there are certain problems that business people need to solve together, and that they have to share their experience with those who are just beginning."

Since it was founded in the spring of 1999, the partnership has seen its list of members grow from its original fifteen to more than eighty. One reason for such rapid growth is that the Tomsk Partnership offers local entrepreneurs an invaluable service: its staff of experts provide training and consulting services on all aspects of running a small business—from legal issues and tax regulations to financial analysis and business plans. In Russia, where the vast majority of business people have no formal business education and often very little business experience, such help is badly needed. Perhaps more important than the problem of education, however, is the lack of investment in good business ideas. Realizing this, the partnership’s directors applied to the Eurasia Foundation in August 1999 to support a new project.

The Tomsk Partnership had a simple goal for its project: to increase access to investment capital for small and start-up businesses in Tomsk. They decided to take a two-pronged approach to the problem: the partnership’s experts helped entrepreneurs develop strong business plans, while its members combined their financial resources to set up a loan guarantee fund, providing security to lenders who might be wary of working with entrepreneurs lacking a credit history. A $35,000 grant from the Eurasia Foundation made it possible for the Tomsk Partnership to hold more than 1,440 hours of free individual consulting sessions, plus a series of seminars teaching more than 130 local businessmen the fundamentals of writing and implementing effective business plans. The partnership then chose sixteen promising investment projects and helped them receive loans worth more than $250,000 from local commercial banks and regional funds for small business support. Dmitry Tuzovsky’s company, Oxidant (which received a start-up loan of $14,000, partly guaranteed by the partnership), is indicative of the success these projects have had: collectively, they have created more than 158 new jobs and, on average, every $3,700 of investment has resulted in almost $12,000 in increased sales.

Another firm that benefited from working closely with the Tomsk Partnership’s consultants in developing a business plan was Tomsk Fish, which ultimately received a bank loan of over $11,000 (also partly guaranteed by the partnership’s fund). To stay competitive in the local market for fish, Oleg Fillimonov, the firm’s director, saw that his company desperately needed to vary its product line. Oleg, like many of the partnership’s clients, had never turned to banks as a source of credit. As Ekaterina Kalmikov, one of the partnership’s consultants, explains, "A lot of Russian business people have the idea that it’s bad to be in debt to anyone. Part of what we have to teach them is that it’s standard business practice to work with banks and take out loans to develop their companies." With the new, more modern equipment that Tomsk Fish was able to buy, the company has been able to increase the range of its products from six to twenty-three, and it has tripled its sales volume. No less important for the firm’s future growth, Ekaterina points out, is that it now has the beginnings of a good credit history. "The next time Oleg needs capital to expand his business, the process will be much easier—now the banks can look at the record to see that Tomsk Fish is a good prospective client."

After the Tomsk Partnership got its small-credit program off to a start with the help of the Eurasia Foundation grant, its loan guarantee fund and consulting services for writing business plans have become standard features of the services it offers clients. Elena Ulyanova, director of the video production firm Alica TV, recently turned to the partnership for help in realizing one of her dreams: to expand her company to create a new, independent TV channel in Tomsk. Elena and her financial manager worked intensively with the partnership’s consultants to develop a business plan, and Alica TV ultimately received a $92,000 bank loan to purchase new equipment and set up a studio. The company’s staff has grown from twelve employees to forty, and they soon plan to move their "Family TV" channel to a new frequency that will enable them to reach the entire Tomsk broadcasting area. Elena adds that, as the director of an aspiring independent TV channel, she had to overcome a certain prejudice held by many creditors. "A lot of people in Russia think that a television company can’t be self-supporting—that it can only exist on state funds." With healthy advertising sales and a strong business plan, Alica TV is showing viewers in Tomsk that local television can be a profitable business, too.

The partnership’s clients and members represent the entire spectrum of small business life in Tomsk, from industrial manufacturers to street cafes. Despite their differences, they all come to the Tomsk Partnership with the same hope: that they can find help to make their ideas and plans reality. With business training and access to capital, many are doing just that—and building a healthy private sector in the process. The staff of the Tomsk Partnership realize what is at stake in their work. "Everyone can see that the future lies in small business," says Olga Koneva, "and we have to support it."

May 2001

This document (c) 2001, The Eurasia Foundation.
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