The 10 mistakes that Italian entrepreneurs do in Serbia

We really learn only from our failures, because success, which is often the result of chance as well as its opposite, only strengthen our presumptions.

Therefore, also for what regards to investments in Serbia, especially planned by small and medium-sized companies, here is a shortlist of mistakes, superficiality, prejudices and unfounded optimism, that resulted in companies and entrepreneurs seeing their projects in Serbia fail.

Opening a company in Serbia is relatively simple, but then what? Let’s at least try not to do the following mistakes.

1. Strategy focused only on costs

   Nowadays, the strategy based on reducing labor costs cannot be the only motivation for investing in Serbia. Certainly, it remains a competitive factor compared to almost all the countries of Europe, but, alongside other reasons for choosing Serbia, we must also look further. The expenditures for energy, logistics, taxes on corporate income and administrative management are also lower than in other countries but, once these savings are made (significant only in the medium-long term), do we really believe that they will forever guarantee greater margins? If anything, it is essential to ask ourselves which new customers, new markets, new products, and better organization do we want to develop thanks to our investment in Serbia and the advantages it offers us. As long as we limit ourselves to costs, we will have a rear-guard attitude, so we will easily be overtaken by companies with even cheaper solutions and a more advanced strategy.

   2. “Internal” outsourcing

   Even today I am contacted by small and medium-sized enterprises that would like to transfer only simple and labor-intensive phases of the production process to Serbia. From a fiscal point of view, this is the outward processing regime, which allows you to export raw materials outside the European Union and then re-import semi-finished or finished products, paying taxes only and exclusively on the “manufacturing added value “. I call this approach “internal sub-contracting”, one of the most trivial and recurrent mistakes for small businesses. If you can’t count on large volumes of production, set up an investment project, spend money on travel, consulting, plants, machinery, personnel recruitment, shipping and so on, to send semi-finished products to Serbia to be assembled or finished and then send them back after a few days, you will burn the money you saved in Serbia by logistic and administrative costs, and, sometimes, also generate a loss.

   That’s why I always recommend immediately starting production in Serbia or at least some lines of finished products or complete services. This is the only way to really test the country and achieve a real competitive advantage.

   3. Generational change

   Often the entrepreneur imagines the factory in Serbia as a sort of managerial playground for one of his sons. And from his point of view, the idea would not be wrong – to increase the managerial skills of the designated heir in a country that is anything but dangerous, with non-obsessive rhythms, abroad but not far from Italy, involved in the family business but not within the spaces manned by his father and, not to be underestimated, with a very lively social life and very beautiful women. But the son wonders why he should leave the friends and comforts he grew up with to face all the complexities of a start-up, often located in a small town in the Serbian province, having to deal with a Slavic language written in Cyrillic in official documents (and perhaps speaking not-so-good English), with collaborators who have no experience of those who have always worked in the family business and also having to deal with girls with a rather different mentality from those ones from back home.

   Read the full article on Serbian Monitor by clicking here