1. Investments for starting a business and profitability
In the Netherlands, living standards are 6.5 times higher than in Russia (the Netherlands ranks 9th in the countries in terms of living standards 2020/2021), so, in general, business investment in early stages are more severe. This also applies to the payroll and contributions and insurance.
The average salary in the Netherlands is slightly less than 3 thousand euros, in Russia – 32 thousand rubles. or 370 euros. It is true that earlier there was another condition for starting a business in the Netherlands, which has now been canceled – the deposit of a start-up capital of 18 thousand euros was required.
For entrepreneurs in the Netherlands, staff is expensive due to the large number of contributions: for workers’ social security against unemployment, health insurance, disability, pension. Such costs can be up to 30% higher than employees’ salaries. Human capital in the Netherlands is much more expensive than in Russia.
2. Renting or building will also be more expensive
If we decided to start our business in the Netherlands, then the cost, for example, of building an arena would be 40% higher than in Russia.
But all this has one drawback – the average check in the Netherlands is higher because people have more money. The average annual income of a Russian family after taxes is 17.8 thousand dollars, the Dutch – 29.3 thousand euros.
3. Consumer and marketing portrait
In Russia, the population is less soluble, but more consumption-oriented. The Russian consumer thinks less about his expenses, such is the culture: you earn a thousand euros a month, you spend those thousands. In the Netherlands, the whole culture is focused on saving income and creating an airbag, so consumers are more selective. They need to be persuaded to spend part of their profits.
In the Netherlands, the commercial sports company competes with sports associations, of which there are about 25 thousand in the country. More than 5 million Dutch are members of one or more associations.
In Russia, there is no such competition with associations, but there is competition from sports trade structures. Here, too, such methods of attracting customers as “word of mouth” often work. We are often visited by clients who have learned about us through the recommendations of friends and acquaintances.
The main difference is that in Russia the market of influencers is much better developed Instagramthan in the Netherlands. As a result, social media sales in Russia are also more active, accounting for 51%.
4. Depreciation of the company
In Russia, the payback of a business is faster, the chances of winning a big jackpot are higher. This is difficult to do in the Netherlands. But entrepreneurs take more risks. Because funding is often raised through private guarantees. For example, a businessman can mortgage his apartment as collateral and if the business fails, the bank or investors will remove it.
In the Netherlands, this is far from over, the whole issue of a limited liability company (LLC), which is the most common form of LLC – a legal entity abroad, is just a limited liability company.
In Europe, businesses are not connected to the individual. You run a business and you get paid and people do not ask for a personal guarantee, so in the Netherlands it is easier to risk other people’s money.
If we talk about City Sport, then in Russia the amortization of our business in terms of investment in the construction of the arena in the pre-Covid period came to 2.5 years, now it lasts about four years. In the Netherlands, this period can reach 8-10 years.
5. Sources of investment
It is now easier to find an investor in the Netherlands. It’s easier to get bank financing for businesses there. Banks give loans at 1.5-2%. In Russia – below 6-10-13%.
Another option in the Netherlands is investment platforms. From investors you can get funds at 6-7%. It is more profitable for them to invest in certain projects, as there may even be a negative percentage in the accumulated savings now.
In the Netherlands, you can also use innovation grants. For example, if you are developing or researching a new product, you can apply for a WBSO grant – a deduction of € 19,000 per year from your total payroll tax.
6. Tax burden
There is no dividend tax in the Netherlands. At the same time, the tax rate is quite high – 15% for companies with income up to 245 thousand euros and 25% for those with higher incomes. But there are many benefits. A company in the Netherlands only pays income tax, so it is easier for people to make money from the business.
Also in the Netherlands, new companies are eligible for tax incentives. They are allowed to deduct a certain amount from their annual income.
In Russia, in addition to income tax, which is 20%, another 13% is deducted from dividends.
Sports services in Russia are not subject to VAT, so our company is exempt from paying this tax.
7. Working in a pandemic
The pandemic has hit the economies of all countries, businesses have suffered everywhere. The tourism industry, catering businesses have sunk.
In the Netherlands, in addition to financial support measures for businesses, several emergency programs have been introduced to save jobs and generate temporary income from self-employment. Last year, almost immediately after the restrictions began, the finance ministry set aside 19 billion euros to help businesses.
The government stimulates international start-ups through a special package of services. For example, there is a start-up visa, a special program and assistance from various organizations that help both to open a store in the Netherlands and to provide a wide range of incubators and accelerators.
We managed to survive the pandemic thanks to the accumulated funds and the debt restructuring with creditors, banks, owners. For most of this year, we pay double prices to offset the amounts.
We are now continuing to develop, build a large hockey arena and also plan to build 10 football arenas.
8. Social entrepreneurship
The sport we do is partly social entrepreneurship. In Russia and the Netherlands, the situation is still different.
According to a study by the Thomson Reuters Foundation, the Netherlands was ranked in the top ten countries for doing social business and ranked seventh. In terms of the possibility of implementing socially important projects in the Netherlands, there are more opportunities for this.
Russia is still in 23rd place, but this result has improved compared to previous years. In 2016 there were 31 positions.
An example from our Russian practice: together with ANO “Social Investment Body” we implemented the Football Russia project. This is the construction of covered stadiums in the territory of secondary schools. The Agency contributes to attracting extra-budgetary funds for health, education and sports projects.
9. Our experience in the sports industry
In Russia, the sports company is relevant in terms of infrastructure – it is necessary to build and offer sports services on its basis. This is true of football, hockey and many other sports.
It is almost impossible to start a football business of this kind in the Netherlands. The position was filled by the state – it is actively developing amateur sports.
At the same time, in the Netherlands, as in Russia, the development of sports that have recently become fashionable (for example, squash, padel) is very promising. In both countries, there are entrepreneurs who build websites and make money from them. These are often boxing clubs – boxing is relevant in the Netherlands.
Sports such as skateboarding, fencing, softball, and speed football are now popular in the Netherlands. All this requires equipped enclosed spaces. In this area you can grow your business, while the football infrastructure is fully provided by the state.
Any sports business can be developed in Russia. Moscow lacks infrastructure for all kinds of sports: hockey, squash, tennis, football. The problem in Russia is that many sites have also been created for some kind of development stories. For example, the construction of homes and office space. Every time something is demolished, therefore the construction of new sites is always relevant.
The situation with the infrastructure in the regions is even worse. On the one hand it is in demand, on the other hand its construction is unprofitable. In cities with a population of over a million or half a million, a depreciation of 3-4 years is not even worth dreaming of. It is almost impossible to implement such projects on lease.
A football arena costs about 25-30 million rubles, a hockey arena – 120 million rubles. If you rent it for 9-11 thousand rubles an hour, as we do in Moscow, the investment will be repaid within three years. In the regions, the ceiling for renting an arena is 3-4 thousand rubles / hour, because of this, businesses in other cities are unprofitable.