Business in Ukraine: how Ukrainian entrepreneurs create new jobs despite the ongoing war
Despite Russia’s full-scale invasion of Ukraine, businesses continue to grow. Ukrainian government is trying to stimulate this process by reducing the tax burden and providing soft loans and grants.
The research by the Center for Innovation Development, the Office for Entrepreneurship and Export Development, and the national project Diia.Business shows that the process of registering a new business is being restored in Ukraine. In April, fifteen thousand business entities were registered. In August, the number increased to more than twenty-three thousand, and the number of new businesses was twice as high as that of closed ones.
In October, journalist Anastasia Kondrat talked to entrepreneurs who told how they had managed to open new business initiatives despite the war.
New initiatives in the capital
On October 2, the first bookstore of the Vivat publishing house was opened in Kyiv. On this day, about 1200 visitors came. Despite the air raids, they waited in line for 30 to 40 minutes to buy a book.
The preparation process lasted two months. Now the publishing house has four bookstores —- in addition to Kyiv, there is one more bookstore in Lviv and two in Kharkiv, which continue to operate under constant shelling.
General Director of the publishing house Yuliia Orlova says that Vivat had planned to open a bookstore in Kyiv even before the full-scale Russian invasion, but the war made its adjustments. “We wanted to open a bookstore in Kyiv, which could be the center between Lviv and Kharkiv,” Orlova says.
The main question for the team was whether it was worth opening a bookstore during the war. But the publishing house wanted to show that the team still worked despite the difficulties. “We are a publishing house from Kharkiv, and by opening a bookstore in Kyiv, we wanted to show that the publishing house is alive,” says the general director.
The publishing house has about 100 employees who work remotely, although some team members remain in Kharkiv. Yulia Orlova says that in addition to performing their duties, each employee tries to help others.
Vivat believes the war’s psychological consequences affect the team’s creative work. “Creating a book is a special process. We have to look for additional strength because we are constantly worried whether our relatives are safe and whether our children will be able to go to school,” says the CEO.
In 2022, the publishing house expects a 40% reduction in book publishing, but they hope to catch up next year. Vivat is experiencing a shortage of customers, as some of them are in the temporary occupied territories. Also, due to economic processes, prices for books have increased.
However, the demand for books in Ukrainian has increased since Ukrainians began to abandon Russian-language copies massively. “I am optimistic about the future. I think the publishing business will soon continue to work steadily, if not thrive,” says Yulia Orlova.
The Vivat team is motivated by feedback from readers. They want to expand their fantasy line – to buy the rights to publish about 100 books. But there are challenges with this in Ukraine now because of the war: due to the National Bank’s forced restrictions on payments in foreign currency, the publishing house cannot pay for the purchase of rights. Also, Vivat plans to expand its offline network – to open a bookstore in Ivano-Frankivsk, and it also receives requests to open in Odesa and Donetsk regions.
How do IDPs start a business in a new city?
In July 2022, the Pershyi (First) cafe was opened in Lviv, founded by internally displaced persons from Kharkiv – Mykhailo Rudnev, Vladyslav Liubchenko and Yevhen Vlasiuk. The men say that Pershyi is a part of Kharkiv in Lviv. The name means this is the first business experience in the service sector.
Before that, the men were engaged in their business initiatives: Yevhen Vlasiuk delivered healthy food, Vladyslav Liubchenko was the owner of a home decor company, and Mykhailo Rudnev was involved in video and photo production and crisis management.
On February 24, the men closed their projects, and in early March, they left Kharkiv and took their families to safe places. Over time, they began to volunteer – they organised the transfer of humanitarian aid to Kharkiv. Then, in May, they decided to open their own new business.
“In May, businesses began to take off. So I suggested opening a small coffee shop where you could drink coffee. Later, the idea of a coffee shop grew into a full-fledged establishment with a kitchen,” says Liubchenko. We chose Lviv because of its relative safety and size – it is the largest city in the west of Ukraine.
The owners wanted to create the atmosphere of Kharkiv. “The service sector in Lviv is different from what we are used to. We wanted to cook food, serve it, and communicate with customers the way we used to at home,” Vlasiuk says.
Earning our living was also a motivation to start a new business during the war. In addition, we are used to working for ourselves. “Volunteering is good, but we need money to live on. Also, in times of war, we need to support the country’s economy,” says Rudnev. The guys understood the risks and did not expect the cafe to become immediately profitable.
However, they succeeded – the place has become popular among both internally displaced persons and Lviv residents. “The establishment of Pershyi was our improvisation. We studied all the processes gradually,” says Yevhen Vlasiuk.
While preparing for the opening, the men felt the support of the locals. In particular, the owner of the premises they rented helped to prepare the necessary documents. “We always received help, and it gave us a feeling that we were on the right track,” says Vladyslav Liubchenko.
The main problem remains security – due to air raids and the possibility of rocket attacks, fewer people visit the establishment. Also, entrepreneurs do not plan to create new establishments due to uncertainty in the security situation.
Relocated business: is it possible to save an already created project?
The coffee shop-bakery Prosto kava was opened in Sloviansk, Donetsk region, in 2016. Initially, the owners planned to create a showroom selling handmade products where you could drink coffee. However, over six years, the place has become popular among residents, so they added catering, master classes, and film screenings to the services offered.
Manager and administrator of Prosto Kava Alla Minina says that with the beginning of Russia’s full-scale invasion of Ukraine, the employees remained in Sloviansk. They had already survived the city’s occupation in 2014, so there was no fear. Prosto Kava continued to work after February 24, and they added volunteering to the usual activities.
In early April, it became hazardous in the city, so Alla Minina and the coffee shop’s owner, Yulia Dolhopolska, decided to evacuate their five employees with their families to Kropyvnytskyi, Kirovohrad region. “In Kropyvnytskyi, we were sitting still, reading the news all the time and not developing in any way,” says Minina.
In June, the women decided to continue the business because they realised they needed to provide for their families, create jobs for those workers who had been taken away and financially support the Armed Forces. They decided to relocate their business under the state program: they left an application on the website, and two days later, they were informed that they could move their equipment from Sloviansk to western Ukraine by rail. “We decided to use the state program because it would have been costly to move the equipment on our own,” says Alla Minina.
The women chose Ivano-Frankivsk because, under the program, they could transfer their business to the western regions of Ukraine. In the city, they were satisfied with the cost of renting the premises, where they started baking desserts for local coffee shops. “We started writing to cafes and offering our products. Not everyone could accept our products because we had our own baking. But despite this, everyone we wrote to tried to support us,” says Minina. At the same time, they were looking for grant opportunities to open their establishment.
In September, Prosto Kava opened in Ivano-Frankivsk. The women also looked for handmade artisans among internally displaced persons in Ivano-Frankivsk to help them. So now you can buy cards, candles and knitted products from artisans from Kharkiv and Sloviansk there. They also hold master classes; half of the proceeds are donated to support the army. “For us, the cafe is not about business or profit, but self-realisation and conveying our worldview,” says Minina.
The coffee shop plans to expand. Alla Minina and Yulia Dolhopolska expect that after the victory of Ukraine, they will return to Sloviansk, where they will continue to work. “When everything is over, Prosto Kava will work both in Sloviansk and Ivano-Frankivsk,” sums up Minina.
Translated by Oleksandra Sobol