Making Money in Bucharest

Making Money in Bucharest

Whether you are a World traveler, or an expat deciding to settle in Bucharest, unless you are independently super-wealthy, you’ve probably thought about what you can do to earn income and/or occupy your time overseas. The internet today is awash with many “get-rich-quick” schemes and “retire-over-seas” plan of action kits. While all this is information is nice and in some ways functional, it almost always assumes that you are beginning with a rather large nest egg. Sometimes we don’t actually have a couple hundred grand lying around from pensions or retirements or other investments to “drop” into an apartment and “turn-key-lifestyle” at our new home overseas. So that brings us to the “I wish to create some income, maybe start a business, so what do I need to do next” people. Within the next paragraphs, you’ll get an inside look at what to expect when moving forward with your business venture.

Identifying a niche

When we [our group of expat friends] first arrived in Bucharest, Romania 4-5 years back for real estate purposes, we had all the excitement one would expect when first landing and wandering around in a land that was essentially foreign to us. We passed through all the stages of ex-patriotism, most importantly the stage where we as business owners and entrepreneurs look around and think “wow…wouldn’t THIS be a great idea for Bucharest?” While this is great fun to do and helps you spawn realistic ideas, don’t be to keen on falling in to this “trap” as I’ll call it. We’ve looked at opening fast food chains, luxury spa’s, Name Brand clothing labels, real estate offices, and more. We looked at both traditional and highly westernized business concepts. At the end of the day, we’ve found that when taking into consideration the amount of overhead versus the time for the business to actually absorb and be accepted into the local marketplace, and the amount of red-tape to get there, one may be better off pursuing other “offbeat” types of income streams. We’ll talk specifically about these off beat type plans in an upcoming post. Always keep in mind that whatever we can do in the US or the UK, the Romanians can typically do it cheaper. Not necessarily better in all cases, but cheaper… and this has a “trickle down” effect. Run your numbers accordingly.

Right now in this “worldwide economical crisis” laziness and affordability somehow go hand-in-hand. I was told twice in recent days by two different Romanians the following phrase: “Romanians don’t like to give money. They only receive. If they don’t receive they take.” I debated long and hard about referencing this in here, as I was afraid that too many people would take offense to that and say it is demeaning and insulting to Romanians. I disagree and I feel it is some important wisdom when considering a business or service of any form here. You see, the thing about that phrase is that it’s so blatantly true and honest for virtually any culture or society around the globe. Isn’t everyone’s economic well being based on receiving money rather than giving money when it comes right down to it? (Please no Charity comments here) Now clearly transactions occur, business open, and trade occurs in Bucharest… but the PRIMARY point of that phrase is that Romanians are really “tuned in” to the fact that you MUST provide value if you expect to earn any money. Period.

So what is the simplest way to identify a proper niche when living in Bucharest? Well, the basic answer is easy, as well as universal. Do what you enjoy! If you have a passion for something and are knowledgeable about the subject, you will automatically default to “providing value” for your customers. Once you begin with the passion, you’ll find your way and you’ll find your answers. There is no “secret” business that will magically grow in Bucharest because it’s different. You may decide that a landscaping company is a sure bet here, or a 1950’s American Diner, but slow down… someone else has probably thought about it, and in some instances moved forward with it, only to find that reality sets in, and the numbers just become numbers. But then again… you never know. The less passionate move on… and fast. The faux-passionate lose their asses.

What are your hobbies? What are your skill sets? What do you feel you enjoy doing that you know better than the next person? If your passion is real estate than by all means, go down that road. If your passion is writing, than talk to me… you’re in business already. Marketing? the same. Art and photography? Open a themed art gallery. Cars? Open a repair or performance shop for an iconic brand! Did you know that there is a growing niche in paint-less dent removal in Bucharest? Computers? “Expat Computer Service & Repair… We Come To You”! As with any of these business, you’ll have to run the numbers and complete your business plan, as well as build through all the trials and errors that will occur in normal business growth plus a little extra! The bottom line on choosing your niche is to start with something you believe in and love. If you don’t it will be a rough ride.

Legalities

Attorney’s and permits and licenses… oh my. This is the big WTF of business here. All the red-tape. Yes you do have to be registered to do business here, especially if you have a brick and mortar business. You must be licensed, you must be registered with the proper governmental agencies (everyone has their hand in your pocket here, truly) and you must be additionally registered to actually perform the duties and sell the products your company actually intends to provide and sell. This is the “multi-tiered” process of documentation you’ll come to find just pleasurable here in Romania. Each legal document is a “secret key” to 50 more hidden documents. It’s like a role playing video game sometimes. Did you collect the notarized golden goblet of fire in the appropriate amount of time? Uhhoh.. game over.. try again. All the joking aside on this one, make sure you consult an attorney in the beginning and start properly. Be clear though that a lot of the legal “issues” you’ll come across in Romania as well as other “growing” nations are simply ways of creating bribes. Here is another HOT TIP you’ll thank me for later… if you don’t speak fluent Romanian, hire a professional translator to stand by your side throughout EVERYTHING. We’ve found that things (especially in legalese) do indeed get “lost in translation” quite often. Overlooking critical information can be detrimental in your home country. Overlooking something in Romania can lead to trouble… and expensive bribes (I didn’t say that for the record). We all know the old adage “It’s easier to beg for forgiveness than to ask for permission” and while that is essentially true here in Romania, sometimes when looking at the big picture you will see that it is better just to “deal” with an issue today than to pass it off until tomorrow. Legalities and paperwork in Bucharest must be gone over with a fine-tooth comb, and you MUST make sure that your documents follow your plan of action from start-to finish. If not, you may be looking at a “Re-Set” of your time, effort, and money. Not good. A quick secret with the legalities, internet and web based businesses can be headquartered overseas yet still effectively do business here, or anywhere. Just keep in mind the next issue that will arise, and that is the overwhelming desire that Romanians have to receive a stamped receipt…

Accounting

Bon Fiscal. I’ve been asked for one of those many times, and been accused of many things if I was unwilling, or unable to provided this “coveted” receipt. It makes perfect sense that one would want to keep adequate records, as well as create a paper trail for tax purposes, but sometimes I would much rather just exchange goods or services for some cold hard cash and be done with it right? Maybe. If you can. You see, here in Bucharest, a lovely and simple adding machine is more than meets the eye. It’s a multi-hundred-euro piece of cash register gold. You need to have one, it will cost you money, it will provide receipts, and account for your taxes that you will have to pay. That brings us to our next point.. taxes. Romanian is by far NOT a tax haven. This isn’t Cypress, nor is it Panama. It’s Romania. You must pay taxes (unless you don’t) for everything you account for. Tax rates will very, but expect to be somewhere between 15% and 20% off of anything you sell. I will not be going to deep into anything legal or administration-wise on this article because I am NOT an accountant or a lawyer, so as with any column, the best advice I can give on this is that just because this is Romania, you can’t get away with everything, so consult the proper individual(s) before moving forward. Overseas earned income taxes and portfolio income taxes? Ask your accountant. Don’t stop when you hear information that doesn’t sit right with you. Tax laws have legal loopholes. Use them.

Employees

If your company’s business plan calls for employees, great. If not, you may consider hiring anyway if you can squeeze it in the budget. Romania is still known for it’s relatively cheap wages. Employees are typically associated with a larger percentage of business overhead in the UK and the States (or most elsewhere for that matter) and this simply isn’t the case in Romania. Consider running the numbers with a focus on employees doing more of the day to day activities, as well as the “replacing yourself” approach. In some, as well as many, instances it may be a great return on investment to pay an employee to pass out promotional flyers for instance. At 8-10 dollars per hour in the US this may not be very cost effective, but here you could probably get away with a profit. Employees here typically start off their working careers with an average salary of 800-1000 lei per month full time. Full time is also a bit ambiguous, and is often more than the 40 hour work week we are accustomed too.

Working, interacting, and managing employees is a little bit different then we are used to, however still vaguely sticks to the same basic “rules” of managing. If you pay a salary, nine out of ten times you will receive the work output roughly equivalent to “just enough to keep their job”. There is a lot of distrust here when it comes to employee/employer relationships. It goes both ways as well. Employees do not trust their employers because they typically get taken advantage of when it comes to actual duties and responsibilities compared agreed upon job description. There are also quite a few instances where the threat of termination or salary cut is used as a dangling carrot in order to get more out of your employee(s) than originally agreed. This is one of the reasons the employee advocate groups have risen to be as strong as they are. Employers also tend too take the offensive with their employees as well when they [employees] often “take advantage” of every opportunity they have to earn money for nothing. If you give too much slack, it will definitely be taken, trust me.This is basic management 101, but is multiplied ten-fold here. Keep your job duties clear. Honor your agreements, and hold your employees entirely accountable for their actions and responsibilities as well. The best way to hire and overcome the largest obstacles? Seek students of public or governmental universities looking for gigs. Why public and not private? Private schools have a large quantity of students that are NOT attending school, or bribing someone to pass them through school.

The private students [generally] tend to have a diminished work ethic, where as at governmental or public schools, a student will cease to become a student if certain milestones (including attendance) are not met. Pay commission and assist with transportation if needed. If you are paying only commission or a large percentage of the employee’s earnings are based on commission you will be much better off. You’re employee will be better off as well. You will achieve higher profitability and productivity, and you re employee will be motivated by the potential to create a greater lifestyle for themselves as well as go above and beyond their job responsibilities to achieve MORE MONEY! If they don’t like this, move on to the next employee. There are plenty of people that will claw for this opportunity. The bottom line on employees is this: If you can justify hiring, do so, but be aware of the tax complications as well. Treat your employees well by giving them above average opportunity to succeed and prosper. Protect yourself by doing what you say, while only tolerating the same treatment in return from your staff.

Marketing & Advertising

The US and the UK have been bombarding it’s citizens with passive and active advertising for many. many decades now. This marketing and advertising has been fine-tuned and tweaked over the years to adjust against the “immunity” that people inherently build up against such tactics. Marketing and Advertising nowadays is an entirely new animal. The days are slowly disappearing when one could achieve greatness in business simply by “outspending” the next person. Companies that are attempting to market their goods and services with high cost media via traditional methods will more than likely fall in to the “pit” of anonymity. As an expat, when starting a business, always think small and effective. Try the guerrilla marketing techniques. If you’ve decided to open a international name brand business that will carry it’s own weight in brand awareness, the you probably have a golden goose. On the other hand, as an expat, you’re more likely going to be pursuing your passions as we’ve previously discussed. This being the case, you’ll be watching where your money is going, and want to focus on low cost methods of advertising and marketing. For Bucharest, as they are relatively new to the many “in your face” guerrilla techniques, you can stick with something as simple as handing out flyers, or even making your “storefront” if you have one, stand out more than the competitors’. The bottom line we’ve learned on marketing in Romania is never plan your campaign based on successes elsewhere around the globe. Go to where your customers are and learn what they want. Ask. Relationship marketing is key here. Keep in mind that the consumer protection laws here are somewhat stringent. Be well aware of what your product is, or what service you are providing. At some point in time you will be challenged on who and what you are. Be prepared for that.

In Summary-

Doing business in Romania can be and is something that requires a lot of courage and a lot of determination. Romania is clearly not the Holy Grail of “business friendly” or “foreigner friendly” for expats traveling the Globe. But once you get over the start-up hurdles, and get to know the right people, running the correct business here can be profitable. Learn the ways, and learn your demographic. Getting this wrong can set you back. Build and grow your network of knowledgeable people, and be humble. You never know who knows who and who knows what. Make sure you plug in to Bucharest Forums and networking groups. Get familiar with the big names in the worldwide expat network online like http://www.escapeartist.com and others. Although this website is about 75% advertisements, try to weed out the good stuff. There is a wealth of information online for virtually every overseas income topic. Try not to buy into hype.



Source by Trevor Barzee

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