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We view the making of initial sales as the main task of all projects. In fact, such sales make it possible to augment initial practical experience in the market and refine not only tactics but also, at times, even the business development strategy itself. Certainly the concept of business development should take into consideration current trends towards the shorten-ing of product life cycles, which dictates the need to respond quickly to changing conditions. This leads to a situation in which an investment stream is required for the development of new versions of existing products. In a number of cases, profits have been insufficient to support this process or provide for effective support for new products. In particular, perforators for the oil industry are one example of a product that needs to be modernized by improving its consumer properties.

The experience gained in developing small innovative companies to serve the Russian market indicates a need for creating truly self-sustain-ing incubators, in order to address regional development needs. To make an innovation project successful, the following elements are necessary:

  • monitoring of company activities, not only to provide a certain control over the honesty of the company director but also to facilitate analysis of the reasons for nonprofitability and to ensure that corrections are made in a timely fashion

  • detailed business planning and independent expert assessment (of a real and not merely formal nature)

  • access to funding sources for new business activity, as such activity involves a high degree of risk. High interest rates make it impossible to develop this sector; therefore, assistance is needed from state and international foundations.

  • assistance to small businesses in developing a culture oriented toward product licensing. To that end, special protective and incentive measures should be developed.

Within the scope of their competencies, the Legislative Assembly of the Russian Federation, the Russian government, and local authorities can certainly promote the development of small innovation-oriented business in the market environment. Finally, it is worthwhile to stress two potential ways of stimulating the business development process:

  • 1. From our perspective, tax incentives are needed for innovation-oriented business, as this will help attract private capital to this particular sphere. Primarily, this should cover value-added taxes and profits taxes.
  • 2. State-supported innovation funds targeted to specific industries must be created and supported. This will enable the industry-based science and production sectors to play an active role in the development and practical introduction of innovative products.

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