“Foresight technologies in financial provision of small business in Ukraine”

The problems of formation of small business in Ukraine are caused by insufficient financial provision, ineffective mechanism of taxation and unsustainable state regulatory policies. The aim of the paper is analyze financial provision of small businesses and substantiation of its improvement scenarios with the use of foresight instruments. The paper evaluates the criteria of financial provision of small businesses. It offers the organizational mechanism of financial provision of small business. It also assesses the system of relations “state-small businesses” in the formation of financial provision of companies and identifies the main obstacles for the realization of small business potential. The use of foresight technologies in building scenarios for the formation of financial provision of small businesses is proposed. Stages and methods of systemic foresight are considered. The conclusion is made that financial provision of small business in Ukraine should be focused not only on changes in the legislation, but also on the improvement of state support of small businesses and expansion of the relationship “state-small businesses”.


Introduction 
Over the last ten years, small businesses in Ukraine have been influenced by the following factors: the vector of the European integration of Ukraine, changes in tax regulation of small enterprises activity of, the emergence of alternative sources of financing. However, under the conditions of unstable political and economic situation in the country, small business needs additional stable financial provision, because small businesses contribute to economic revival of the state.

The analysis of the latest research and publications
We learnt about the problems of financial provision of companies from the works of such scientists as: O.V. Hryvkivska (2014), I.S. Kozii (2008), O.M. Kolodziev (2010), Cole Rebel (2013), Amy Fontinelle (2016) and others. The ideas of these authors have certain variations regarding the interpretation of the problem's essence. The financial provision of the small businesses in Ukraine is not sufficiently studied, therefore, it requires a detailed examination.

The aim of the paper
The aim of the paper is to investigate of theoretic and practical foundations of financial provision of small businesses in Ukraine and substantiation of the need for its growth.

The main results of the research
Under financial provision of small business we mean the creation of favorable conditions for ensuring uninterrupted, systematic and commercially viable activity of small businesses through accumulation of sufficient volumes of financial resources and their use, as well as minimization of financial risks connected with the activity of enterprises.
It should be emphasized that the criteria for assessing financial provision should include:  efficiency (the ability to do the work and to achieve the necessary result with the least expenditures of financial resources, time and efforts);  quality (the combination of features and characteristics of financial provision, which makes it possible to meet the foreseen needs);  availability, speed and cost of attracting financial resources;  optimization in the structure of sources for the formation of financial provision.
Insufficiency of financing is an obstacle in the development of small businesses (P.O. Adeyeye, B.A. Azeez, O.A. Aluko, 2016). At the same time, in the creation of effective and qualitative financial provision an important role belongs to the relationships of small business entities with other participants of the financial system of Ukraine. With the aim of characterizing the organizational mechanism of financial provision of small businesses, Figure 1 shows a system of financial and non-financial relations between governmental and non-governmental institutions on different levels of their interaction. On the one hand, this mechanism is presented as a definite system, and, on the other hand, as a combination of structural elements, which are capable of interacting both within the researched system and with external environment.
The system of relations presented in Figure 1 makes it possible to determine the directions and forms of their influence on the efficiency of financial activity of small businesses. Financial intermediaries presented in this figure may function at all levels, but usually they have the greatest influence at the regional level. 1 -money savings of founders, turnaround financing from founders, equity capital (registered (ownership), capital surplus), additional, reserve and undistributed profits), capital funds; 2 -net profit; 3 -depreciation deductions; 4 -resources from the sales of liquid assets; 5 -subsidies, subventions, special purpose funding; 6 -credits; 7 -credit (debit) debt; 8 -mutual financing; 9 -financing in the process of realization of special international programs to support small businesses; 10 -insurance compensation (in insured event or termination of insurance agreement); 11  investment crediting of scientific research and developments, as well as other forms of innovation activity; 12 -financial investments; 13 -loans of credit unions, pawnbrokers; long-term leasing of property; 14 -resources of factoring and forfeiting companies in the form of repurchasing of debit debt; 15  long-term financing of new firms (start-up financing) and developing enterprises, as well as those companies that are on the verge of bankruptcy, venture companies; 16  sponsor resources, charitable contributions, grants; 17 -commodity credits; 18 -reduction in the value of credit by granting tax advantages to banks that provide credits for small businesses; 19 -partial compensation of interest rates on the loans granted to small businesses; state guaranties for loans; 20 -attracting small businesses to state orders; 21  the use of simplified taxation systems; 22 -tax deferrals, tax holidays; 23  tax advantages, incentives; 24 -crowdfunding; 25  purchasing the right to use a developed business model (franchising); the issue and floatation of shares and other securities of enterprises through financial intermediaries; 26 -expert assistance; 27 -administrative influence (supervision); 28 -introduction of financial standards; 29consultative assistance The development of small and medium businesses in Ukraine is taking place in difficult macroeconomic conditions with substantial shrinking of the domestic market. We agree with the conclusion of Louise van Scheers that such macroeconomic factors as unemployment, the level of inflation and bank interest rates have a significant influence on the economic state of small businesses (van Scheers, 2016). According to the data of the State Statistics Committee in 2015 in Ukraine there were 1974318 business entities, among which 327815 small businesses and 1630571 sole proprietors (Derzhawria…, 2016). At the same time, the balance of their financial result is negative compared to large business entities. This demonstrates inefficiency of financial mechanism in the activities of small businesses and imperfection of financial provision of their activity. Moreover, during the recent years the state financial policy in the sphere of small business is not only aimed at supporting enterprises, but also, on the contrary, slows down their development ( Figure 2). ; "On Amendments to some legislative acts of Ukraine in the regulation of business activity"; 5 -The Law of Ukraine "On Changes in some Laws of Ukraine on simplification of business environment in Ukraine"; The decree of CMU "On approval of the procedures for the use of resources of the Stability Fund in 2009 for the cheapening of credits to support the projects of small and medium businesses, in particular those ones that positively influence the employment of the population"; 6 -The Decree "On some issues of providing small and medium businesses with credit support"; Tax Code of Ukraine; 7 -On the creation of the State innovative non-bank financial institution "Fund to support small business innovation"; 8 -The Law "On development and state support of small and medium businesses in Ukraine"; 9 -The Law "On Amendments to the Tax Code of Ukraine on rates of some taxes and tax benefits"; 10 -On prevention of financial catastrophe and creation of preconditions for eco-nomic growth in Ukraine; The Law "On Amendments to some legislative acts of Ukraine on the limitation of intrusion into the activity of economic entities"; On Amendments to some legislative acts of Ukraine on simplifying the order of starting a business; 11 -On Amendments to the Tax Code of Ukraine on reducing the tax burden on taxpayers; On ratification of the Financial agreement (The project "The main credit for small and medium businesses and companies with a medium level of capitalization") between Ukraine and the European Investment Bank; On Amendments to article 69 of the Tax Code of Ukraine on simplifying the conditions for carrying out business activities; On Amendments to some legislative acts of Ukraine simplifying the conditions for carrying out business activities (deregulation).
In Thus, in the years of maximum unprofitability of small businesses, there is a growth of the shadow economy. That is, an excessive tax burden, ineffective institutional basis of regulating enterprises and insufficient conditions for entrepreneurial activity stimulate small businesses to go into the shadow sector. According to the index of doing business as a key indicator of the state assistance to small businesses, Ukraine takes the 80 position (Table 1).   The

Leading countries
Countries with a medium level of correlation

Outsiders
We believe that in nearest future, the development of financial provision of small businesses in Ukraine is possible not through the implementation of new legislative norms, but rather through the removal of systemic corruption, qualitative improvement of the state support of small businesses and ensuring the execution of legislative norms by all economic entities. The role of state lies in the introduction of the necessary regulatory framework and institutional structure, which would support and guarantee the development of entrepreneurship and establishment of reliable partner relations (Frolov, 2013). In relation to the conflict between the private interests of entrepreneurs and general national interests of society, there is the need in building the development strategy both for the entire economy and small businesses. . That is why we should examine the provision of small businesses on the basis of the main stages and methods of system foresight presented in Figure 4. The use of foresight technologies makes it possible to determine perspectives for the formation of financial provision of small businesses, to outline the possible horizons of its future and develop practical steps for reaching the chosen strategic targets.
The instruments of methodical foresight include the methods of strategic forecasting, used for eval-uation of factors that influence a phenomenon or an enterprise regarding their strengths and weaknesses, possibilities and threats (SWOT and PEST analysis). The discovered strengths and weaknesses of financial provision of small businesses in Ukraine, possibilities and threats are presented in Table 3.

Collection, comparison, generalization of the available information
Questioning, survey, Delphi method, brainstorming, scanning of environment and so on.
SWOT analysis, PEST analysis, analysis of trends, scenario method scanning of the future, etc.
Evaluation, information grouping, construction and development of alternative variants and strategies of the future Selection of the most optimal and rational variant (strategy) of the future building Definition of vision, analysis of hierarchies, scenario planning and so on.

Methods of system foresight
Stages of system foresight Table 3.

Strengths and weaknesses, possibilities and threats in the formation of financial provision of small businesses in Ukraine
Strengths Weaknesses
Small capital volume, necessary for starting a business 3.
Natural resources, available for different kinds of entrepreneur use (water, forest and others) 5.
Wide field of activity for business development 6.
High share of the working age population 7.
Availability of free workforce and qualified staff; 8.
Geopolitical location, which is conducive to foreign trade (location of the country between the EU and the CIS) 9.
Simplified system of taxation 10. Competitive expenditures on wages (compared to the EU countries)

1.
Limited access to financing (high and instable interest rates, insignificant number of firms, the working capital of which is financed by banks) 2.
High level of unemployment 3.
Shortage of technical workers 4.
High consumption of energy and resources by the manufacturing sector 5.
Low solvency of the population 6.
Absence of export stimulation schemes 7.
High level of competition 8. Corruption 9.
Locality of markets 10. Instability of profits 11. Social insecurity of workers 12. Unfavorable business climate 13. Ineffective regulation of market entry: registration, licensing, permissions Possibilities Threats 1. Improvement of business climate in the state through cooperation with the EU 2.
Massive and systemic attraction of investments into the economy 3.
Positive changes in legislation on small business regulation 4.
State policy, directed at stimulation of small businesses 5.
Rise of technological level of small businesses 6.
Readiness to innovations 7.
Growth in the volumes of sold products by entering new markets 8.
Growth, transition to big businesses 9.
Improvement of the financial and economic state 10. Development of business clusters 11. Access to financing on the stock market 12. Lowering of interest rates on credits 1.
Rising costs of raw materials 3.
Limited manufacturing capacity 5.
Danger of quick bankruptcy 7.
Risk for investments in Ukraine in international rankings 8.
Significant bureaucratic hurdles in the implementation of investment projects 9.
Increase in energy dependence 10. Instability, changes of legislative and regulatory framework 11. Import of cheap import products The conducted analysis of external environment made it possible to build a SWOT matrix of strategies for the formation of financial provision of small businesses (Table 4). Table 4. SWOT analysis matrix for the formation of financial provision of small businesses in Ukraine 1-insignificant impact of the evaluation factor (almost till absolute absence); 2 -the factor has some impact on the activity of small businesses; 3 -the factor has a great impact on the activity of small businesses.
The definition of arithmetic mean value for scores and weights of factors in each group made it possible to calculate the force of their impact on financial provision of small businesses and determine that the most important are the factors of economic environment in the country (Table 5). Note: B -influence of each factor; V -probability of influence of each factor; P -the strength of influence of each separate factor (calculated by the formula: The results of the conducted SWOT and PEST analyses proved that the achievement of strategic objectives in the formation of financial provision of small businesses includes the following measures:  the use of advantages in cooperation with the EU in simplifying the procedure of creation and execution of financial activity of small businesses;  increase of companies' revenues by entering new consumer markets;  implementation of state support for the development of technical branches to attract qualified staff;  termination of "brain drain" by creating a system of guarantees for the protection of labor and stimulation of productivity;  the use of attracted credit resources in innovations for reducing the consumption of energy and resources in manufacturing;  the use of business clusters for overcoming the problems of markets' locality and high competition.
The main criteria of the defined foresight should be a plan for the formation of financial provision of small businesses, which would help to achieve a sustainable development of this sphere in the middle and long term.

Conclusion
The results of the conducted research made it possible to determine that the formation of financial provision of small businesses takes place under the negative impact of factors of economic environment and insufficient state financial and legal support. As a result, we observe the growth of the shadow economy and the lack of relationship between the country's development and the activity of small businesses, while in the EU countries such relationship is the criteria of socioeconomic prosperity. The use of systemic foresight may positively impact not only the activity of small businesses in the short-term period, but also to build the desired scenarios of its development in the long-term perspective. The obtained results of the use of such foresight instruments as SWOT and PEST analyses became the reason for determining the main drivers of the possible development and financial provision (simplification and stabilization of legislation, the ease of access to financing, improvement of the competitiveness of small businesses and others). Further areas of researches are the development of practical measures aimed at achieving the chosen strategic goals.