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Friday, 1 November 2013

The business sector

In the paper edition of the Kathimerini yesterday (according to a radio announcer who I was listening to in the car), it was argued that even in crisis, Greece is still falling back on "failed economic methods", which are clearly no longer a recipe for growth, however much they might have seemed successful in the past: opening up restaurants, bars and cafes, which form 90% of the new businesses being opened in the most recent period, while 25% of these new businesses are the "mass congregation" (μαζική εστίαση) type.

The biggest problem with such businesses is that they do not help to create a suitable environment for Greek business to move onto "new age production": such businesses have to do with entertainment, and not production, and they have the added disadvantage in that they are not seen as particularly useful in a recession. Despite this, during the economic crisis, Greeks continue to open up new restaurants, cafes and bars in the same way that they used to, with the main difference between past and present being in the "brighter packaging" -  fancy chairs, shiny paper, funky glass shapes, upmarket decor, paper napkins that look so pretty you don't want to wipe your hands or face on them, etc. 

Worse still is the high price attached to the basic products that are sold in such environments, especially for things like yoghurt, coffee, ice-cream, biktekakia (little meat balls), etc. What seems to be the most important aspect of such products is the wrapping - the product contained in them is not necessarily expensive, but the price is not based on the final product: it is based, as stated above, on the chairs and paper and glass shapes and decor and those pretty paper napkins. When people use such services, they rarely think about what they are paying for to come on their plate, or in their glass or inside the wrapping (until the bill comes). 
From http://endeavor.org.gr/en/report - the full report is available here
In Greece, only 1/1000 businesses seem to show strong development dynamics; most are lacking a business plan. The most successful Greek business developers are young (20-45 years of age), they are experienced in business and have built up professional networks, and are business-focussed by choice. They have never worked in the public service, they have wide experience abroad, and they understand well the importance of building up contacts and networks. They also seek employees, mainly in their sales and IT departments. So it's not all doom and gloom. Opportunities are there, and so are the right people... but the wrong choices are being made by most new entrepreneurs.

The trend of opening up food-related businesses is not a new phenomenon in the European world. Similar problems are now coming to light in other western countries. It seems that we have nothing new to produce or sell, because these days most people have most of the things/services that they need, and any extra things/services that they would like simply go onto a wish list because we generally can't afford them and it's become more difficult to access such products. Most people in Greece for example have a mobile phone, whether it's a simple or more complex model, and few of us update it. 

People often ask me why I never opened up my own little taverna. Having worked in my parents' fish and chip shop, I could envisage all the problems involved. While I've been in Greece, I could see the preponderance of such businesses, and the image problem that seemed to be chasing most of them. People need to eat, but above all, the food must be cheap. Otherwise, your business will have to be geared for another market, one where your food is not going to be eaten by the locals, but by richer foreigners.   

Eating out in your own locality doesn't have to be expensive, but if you choose places that try to impress their goodness on you by creating an image that is sold to you through expensive packaging, you are going to have to pay a ton for that, and so is the business owner. My food philosophy is that food must be prepared with the eater in mind, and it must be accessible to everyone. Unfortunately, that simply isn't the way business works these days. Such businesses need owners with money, who are catering for customers with money;  in Crete, such a business is liable to close down after the summer period, or have great difficulty staying open all year round, so the investment is risky and non-profitable. People who open such businesses try to keep costs down by hiring relatives and paying minimum wage (and probably no social insurance). Using one's own produce is also a way to keep costs down, as well as one's own premises, but this simply makes the businesses viable, at the same time as giving family members something to do - it doesn't promote growth (in fact, it is a pretty much one-stop static business with little future). 

Real growth is the Greek food industry is not going to be found in the opening of restaurants and cafes serving up the same frappes and village salads; it is already being found in the primary sector - but it will take a lot more work to run such a business than choosing pretty packaging.  

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