They helped some people in the early days of their business. Some have made real fortunes. And for some, a few years in prison.
Subsidies.
A word that has special connotations in the Czech Republic. My age group still remembers what happened to them in the 1990s. Or even now during the Depression. That is also why I respect people who have subsidies for their own business and try to correct this image. And to help companies use subsidies really effectively.
One of them is Martin Kovalský from Czech Cool Trade. He is also building his company as a business and networking club. An ideal place for long-term business development.
But back to subsidies. With Martin, we discussed the following questions...
🔸 Why is it a good idea to track grants?
🔸 What to prepare for before your first grant?
🔸 What grants are ready for 2023?
🔸 When not to apply for subsidies?
🔸 Why try business networking?
If you are interested in the interview and want to try the subsidies, Martin summarized the most important titles in the bonus "List of subsidy titles 2023"
TRANSCRIPT OF THE INTERVIEW
Martin Hurych
Hello. I'm Martin Hurych and this is Zahžeh. Today's Zážeh will be dedicated to networking, grants, building an entrepreneurial community, and if it's an entrepreneurial community, it's with Martin Kovalsky. Hello, Martin.
Martin Kovalský
Hello, Martin.
What do Chelsea and Baník have in common?
Martin Hurych
Martin is the founder and managing director of Czech Cool Trade. I wanted to start by asking, what is the connection between Chelsea and Baník?
Martin Kovalský
That's a nice question to start with. The blue colours, certainly the fact that I'm a fan of these two clubs and the fact that I believe they are the best teams in the particular country they play in.
Martin Hurych
I don't think you'll get along with a Spartan.
Martin Kovalský
I will have a meeting at Sparta on Monday and I think that Sparta will be the next club and the next company in our corporate community, so I don't mind Sparta.
What is Czech Cool Trade?
Martin Hurych
We were talking about Czech Cool Trade. Tell me how you got the idea to start building a community, what Czech Cool Trade is and how far you have come so far.
Martin Kovalský
It's 10 years ago when the moment and the idea to establish the Czech Cool Trade consulting company came, so in the spring we will celebrate 10 years. There was certainly my experience in the area of subsidies, in the area of business support within regional policy and there were also challenges from clients that I managed within the Moravian-Silesian region in the area of subsidies. There was certainly my education, which was a lot about European studies, Europe and supporting and balancing regions. So there were a lot of these impulses and it was at a time when the economic crisis was ending and Czech companies were looking for help. My colleague who teaches at the Faculty of Economics and I did a SWOT analysis of what could help companies most at that time. So, we came up in the crisis, when we found that companies suddenly needed new orders, needed support in trade, needed support from the state in the form of subsidies and financial instruments. My experience of being in London showed that what was missing here in the Czech Republic was community building, relationship building between companies, between business owners and mutual support. So that was the main impetus behind the creation of Czech Cool Trade 10 years ago.
What's cool about CCT?
Martin Hurych
I'm sure you've been asked this question a million times, but I'm not going to forgive myself anyway. What's cool about Czech Cool Trade?
Martin Kovalský
The fact that we're interested in long-term collaboration, that we also relate the consulting business to building relationships between business owners and top executives, and I think that's cool. It's not cold consulting, tackling different projects and not having a lot of interest in the company. For us, it's about long-term collaboration, it's about building relationships, but it's also about the fact that our project team knows the companies that work with us very well and we know how to support them.
Martin Hurych
When I look at your site, it's a large portfolio of companies starting with me, as a one-man corporation, to multinationals. What can you trace that connects these companies?
Martin Kovalský
What they have in common is that they want to be cool and now I'm lightening it up a bit. What they have in common is that they're interested in having good development and as part of their growth they're interested in having partners that will help them grow. Our consulting company only provides services to companies that are interested in a long-term relationship, 12 months or more. These are all companies that are really interested in growing, and if we look that community is now over 350 companies. As you said, they range in size from smaller companies, family businesses to medium-sized manufacturing companies, IT companies, sports clubs like Baník Ostrava, to multinational companies like Moneta Money Bank, various companies within the automotive industry. What unites them is that they want to have other partners along the way in the growth, success and prosperity of their companies.
Why is it a good idea to track grants?
Martin Hurych
I would start with probably the most visible leg of your business, which is grant consulting. Sometimes I see that because of the excesses, the missteps that have happened here with subsidy programs, there are people who do not trust subsidies a priori. Let's tell them why it's a good idea to pursue subsidies and what it can do for them.
Martin Kovalský
I would like to start by saying that half of the companies we provide consulting services to are primarily interested in business support, marketing support, or building relationships at networking events. It's not that all of the firms we advise are in our corporate community because of the grants. But it's a large portion, so I totally agree.
It is the same with regard to subsidies as it is with regard to the European Union. Our media will mainly highlight the bad things, but for every bad thing you hear in the news, there are 10 good things. How many motorways, how many hospitals, how many schools, nurseries and universities have been built thanks to European money. It is the same with subsidies. There are hundreds of projects that are wonderful, and they help a great deal in the regions where they are, not just for that business group, but for society in general. There will be projects where there are mistakes or oversights. We know that there are some criminal proceedings going on right now where they are dealing with oversights that were 10 years ago. It has moved on a lot in that time, it has become more professional. I think that those firms that did not do the subsidy consultancy well and were not able to run those firms in such a way that they drew down subsidies efficiently and according to the rules are no longer there. The only companies left on the Czech market are those that can do subsidy consultancy and clearly state the boundaries of the subsidy application.
We have a credo and thanks to that we have very good relations in the ministries and various offices that provide subsidies. So if we do consultancy for a subsidy application, and it doesn't matter whether it is a subsidy application in the order of hundreds of thousands of crowns or in the order of tens of millions of crowns, we always respect all the rules. We do it in such a way that it is according to the objective of the grant call and that there is an effect for the person who is implementing it and of course the effect that the authority wants. We honour all the rules and I have to knock on the door that in 10 years of operation we have never had a project get into any trouble or not meet the rules. And more than 4 billion CZK of subsidies for Czech companies have already passed through our hands.
What to prepare for before your first grant?
Martin Hurych
I'm going to turn the question around a little bit. If I decide that I am going to try to apply for subsidies for the first time in my business life, what should I prepare for? From the outside looking in, it's a pile of paperwork and drudgery that I need a partner to guide me through. So what should I prepare for?
Martin Kovalský
That partner is definitely needed if one doesn't want to set aside a bunch of time reading all the obligations, terms and conditions and so on in addition to their business. So I would recommend really getting in touch with advisors who have experience in this area. It's the same as consulting attorneys when dealing with contractual relationships. The days of tons of paper are gone and fortunately, most grant applications are now digitized and many applications are handled electronically, so they are no longer tons of paper. It's important to prepare for this, choose a good consultancy company where they will tell you fairly at the beginning if your project makes sense to deal with it in the form of a grant or if you are better off either taking out a loan or funding it from financial reserves.
We always look at it that way at the beginning and tell our clients clearly what it will cost them, because many grant applications come with various confirmations that have to be secured, project documentation and so on. All of that costs money.
What subsidies are in place for 2023?
Martin Hurych
As the end of the year is approaching, I have a bunch of ideas about what I want to do next year, what I want to build, invest, train people and so on. Let's see what grants can help me with in 2023. What grants do we have open?
Martin Kovalský
I must say that 2023 will be one of the richest years for the Czech Republic. This is because of the impact of the pandemic, so there are extra Brussels funds that will be put into the Czech economy. On top of that, there are economically affected regions, so we have additional regions that have extra subsidy income. We know ourselves that at the moment the Czech economy is going through a difficult period, not only with inflation but also with the impact of energy, so there are a lot of subsidy applications in the pipeline for 2023. This is in the area of energy savings for companies, with a big emphasis on photovoltaics, all the savings in companies from insulation, replacement of heating sources, lighting, water savings. Digitisation is a big area, but there is a lot of support for science, research, so that Czech companies can move forward in terms of competitiveness. What will certainly be of interest to all companies in the Czech Republic is the area of education. Every company can educate its team, its employees, in the areas it needs and have really high subsidy support.
There are also plans to encourage young graduates to receive company subsidies to employ graduates, which is an excellent tool for companies to try out potential long-term employees.
I've prepared a bonus for you, so you'll get this whole list of what to look forward to in 2023 with this release. Plus I definitely recommend everyone to work with our consultancy company, as we have a project manager and our entire project team looks after all the grant opportunities and consults with you personally. So with us you can't miss out on any opportunities.
Martin Hurych
My target audience is a lot of small start-up companies. What can I reach for if I have a software studio of 15, 20 people?
Martin Kovalský
There are many possibilities. If you are in IT, software development, applications, there are special grant calls that allow you to pay for a project team, purchase software and create and move your projects forward. The IT area is very much supported right now. In addition to this, the Technology Agency of the Czech Republic has other subsidy calls that support Czech IT companies to create applications that are interesting not only for the Czech Republic, but for the whole European Union.
Martin Hurych
If I'm working for someone else, none of this may concern me except maybe education. Isn't that right?
Martin Kovalský
There is education, there are subsidies for those graduates. Of course, if your IT company is doing work for someone else, we can help that company find out if the product has the parameters to get subsidies. You can have a team paid by the company and implement that product using subsidies. There are more options, of course. A company of 15 people doesn't mean that it has to be small and that it has to have a small turnover or that it can't have its own facilities, its own real estate. That's why I recommend also for these companies to have partners in subsidy consulting and to keep an eye on those possibilities. Of course, we know that not everybody looks at subsidies, even with that history, as supporting business owners. I just have to say that the times have moved on, that really now those grant calls that are out there are being used effectively for those purposes that help a lot of businesses. They increase competitiveness and thus help the entire Czech economy. So I would put what was there behind me, and I would come back to it now and see what the possibilities are, because there are financial instruments. This is again a new kind, that you get a partial subsidy of, say, 20% and for the rest of the project you get a loan, which is discounted or zero. So there are other instruments to support Czech companies.
What if I'm sitting in Prague?
Martin Hurych
I wonder what to do about the subsidy hole in the middle of the Czech Republic? For the vast majority of it has never been passed on to the people of Prague.
Martin Kovalský
Now it is interesting that many of the subsidy calls are also for Prague, so this is shifting again. There are many subsidy calls where Prague companies can apply for subsidy support. At the same time, many Prague companies have branches in the regions, which can draw all the subsidy support. I may not have mentioned that the Ministry of Industry is still preparing a subsidy call for electromobility, which I think would be very beneficial for Czech companies. It would not only be beneficial in terms of reducing the cost of diesel and petrol, but, of course, in terms of the company's environmental behaviour. We know that social responsibility and environmental behaviour are becoming obligations for prosperous companies. This is a subsidy challenge that would be of interest to all companies, from family-owned to multinational. This has been in the pipeline since spring this year, the subsidy area is very turbulent and not everything that is ready for approval always gets approved. Sometimes it gets delayed. But I still think that, for example, the area of electromobility is now being promoted for the non-profit sector or for the public sector, so I think it's just about setting good conditions. I think it would be a shame not to move this area forward in the Czech Republic.
When not to apply for subsidies?
Martin Hurych
Devil's advocate, when not to ask for subsidies, when to forget about them?
Martin Kovalský
This is a beautiful but difficult question. Certainly one time not to apply for subsidies is when your business is so badly off that you don't know if it's going to work next year. A company would have to be stable, economically sound to even reach for any major subsidies. At the moment when the company is not quite fit, it is possible to use subsidies for training or for employees, but I would forget about all investment subsidies. If the company went out of business in a year, it would have to pay back the subsidy. So that is one point where I would say absolutely not.
The second point that comes to mind is what I said at the beginning, if it doesn't work out economically. We still have companies where we show them that the costs are high, we don't recommend that they deal with it, we recommend that they deal with it on their own, and they still want to implement the grant application. So those are the main two areas where I would not recommend subsidies. If somebody is going to get a grant of 200,000 but the cost of getting the grant is going to be 150,000, 170,000, and we include time in that, we don't recommend applying for a grant there.
Martin Hurych
So I should see the grant as sparking my expansion, not saving the company.
Martin Kovalský
Exactly, if we are talking about larger investment subsidies. For the rescue, of course, there are smaller subsidies, such as staff training, which are possible. But I certainly wouldn't go for big investment subsidies if the company is not economically sound. Then there is the option, which nobody tries here, that someone wants to draw a subsidy, but for a different purpose than the rules. I would not recommend that in any case, because the controls are very good and nobody can cooperate with Czech Cool Trade.
Martin Hurych
What have we not discussed in the context of subsidies, what else should we say?
Martin Kovalský
The area of subsidies is so broad that if we were to break it down, we could sit here for hours. I think our project managers have summarized the most interesting areas where it is possible to get subsidies and support even under the financial instruments in 2023 in the bonus to this episode. For my part, I certainly wouldn't take subsidies as a dirty word. Historically, even under kings, the state or the ruler has always influenced the economy and the economy in some way. It could have been tax cuts, subsidies for millers to build new mills because they needed to eat. That economic subsidy will always be there, whatever government is there, whether the European Union is there or not. We see in countries that are not members of the European Union that the state supports certain segments of business there as well.
In order for Czech companies to be competitive not only in the Czech market, but also in the European market, it is necessary to support them in certain areas. So I would not be afraid of that, companies can just save their investment costs on other development projects, so I would recommend having your advisors to keep an eye on that area. It's a very turbulent area where something we didn't know yesterday may be on the table in a month and companies may get that support.
Why try business networking?
Martin Hurych
You said that subsidies were and should no longer be considered a dirty word. I have to say that Czech Cool Trade is a champion of doing business in areas that are often considered a dirty word, and I don't mean that in a bad way. For me, the other big leg up with you is networking because there is hardly a week that goes by that there is not an email that you are hosting an event. I honestly admire that because I am a tiny networker compared to you and I know what each individual event gives to an organization. Around me, however, I see that networking doesn't exactly have a good reputation with a lot of people. For me, that's quite a shame. So let's talk about what led you to start networking and why I, as an entrepreneur, should bite my tongue and give it a try.
Martin Kovalský
I got my first experience with networking some 11, 12 years ago in London, where there is this community life, not just golf clubs, but there are actually business clubs there and they have a huge tradition. We know ourselves that there are a few milestones in life that are important to us, which is definitely family, but then it's relationships. Relationships are very powerful because they can support you, they can give you energy and when you need something, it's good relationships that help you in your personal life as well. It's the same in business life.
Importantly, it's not just in small business, it's in big business too and any successful entrepreneur will tell you that they have created, nurtured and built business relationships. They inspire each other, they support each other, they help each other to have business partners and that networking and relationship building happens in certain ways at all levels of the business scale.
For me, networking is by no means a dirty word. I would strongly object to it because networking is a space where business owners and top managers who want to build relationships and want to support each other meet at Czech Cool Trad. At most of these events they still get either some know-how or an experience from a sports match. It's a space where everyone is on the same page and everyone is there to get to know and support each other.
Networking isn't about signing contracts, about being hit on. We educate our entire corporate community, after the event you have everyone's contacts and you can support each other. That's how it works the most. If somebody supports you, brings you a great client that needs your service, you're happy for that and of course you're happy to support the other side.
I think the time for business networking in the Czech Republic is yet to come. It is true that networking in the Czech Republic started at the same time as Czech Cool Trade, because breakfast networking started. Any networking is fine, but it has to be targeted, what group it is for, and so it has to be managed. For example, we have a policy that business owners and top managers attend and the aim is to make them feel good. We don't have any timers on how long you can talk, instead we do it at round or rectangular tables and say if you want to talk you don't even have to get up. We make it so that even a budding entrepreneur or a family business owner who maybe isn't an extrovert, isn't used to speaking at conferences or presenting on social media, feels comfortable there. One of the most successful Czech businessmen, who also meet here, can sit next to him in the top 100 richest people. The guided part is really short, it's for everyone to say what they want to say about themselves or what their company is doing right now.
The second part, the informal part, is often more important not only because of the good food, but because the individual participants actually meet each other, develop a liking for each other, arrange meetings and support each other. I think that networking is just blossoming in the Czech Republic. Every networking is good because you meet people who want to get to know each other and support each other. If networking is run like that, I think it's great. We have an event team of employees doing it and as you said, it's a lot of work. We actually have an event team that does events in the Czech Republic from morning to night. I recommend everyone who hasn't been, come and see it, come and experience it, it's worth it. You can even attend a Czech Cool Trade event once without having a consulting services contract with us and your company has become part of the corporate community.
Martin Hurych
I'll at least double down on the fact that you're meeting people who are similarly mentally set and I'll second everything you said about networking. For example, for me in the early days of my business, networking brought me the biggest business for a long time. That's also why I like to give back and have my little networking events. On the other hand, I see more and more people going to networking events who are in a momentary crisis and trying to sell something, or networking events where unbalanced groups are sitting against each other. I don't have anything against financial advisors, but the moment a financial advisor arrives at a business owner networking event, I feel there's an immediate tension and the networking event just becomes this big bad. But otherwise, I find networking to be one of the most underrated business methods for business people.
Martin Kovalský
I definitely agree. However, I have to say that we are very careful about the quality of the companies that we provide consulting services to as part of the business quality certification audit that every company that is part of our corporate community undergoes. If it happens that we learn from our data or from information from other firms that a firm would not operate either ethically or economically correctly, we terminate our cooperation. The company is then unable to participate in our networking events.
As far as the finance area is concerned, we only meet the owners of these financial groups or the finance area. When someone from finance comes to us, it's the owner or co-owner of that company. Sales representatives do not meet with us because it would not be good for the company's owners to meet.
What is business quality certification?
Martin Hurych
Those owners then also feel that they are being hunted and what should happen is not happening, which is open to debate. You provided a donkey's bridge to the certification. How many stars do I have with you after working with you for a year?
Martin Kovalský
One star. But that's not bad, that's not bad, that's excellent. We have it divided into three grades. It doesn't mean that somebody has one star and somebody has three stars, that they're a better company, but it speaks to how long we've been guaranteeing that quality. We audit every company where there are clear criteria, clear methods for how our project team determines that quality. Any company that wants to be part of the corporate community and receive Czech Cool Trade's consultancy services has to meet this. They then get the certification plus of course the additional marketing associated with that, because it's also about marketing to say that we put our hand up for this company, that it's very good and we recommend building a relationship with them and supporting them.
There are three levels. 0-2 years is one star, 2-5 years where we guarantee this business quality is two stars and 5 years and more is three stars and that's the maximum. Now we have decided, because next year we will have companies that we have been working with for 10 years, that we will be awarding the 10-year ones as well. But it will not be more stars, we will not add more stars so that we are not like the European Union. But I would point out that it's not about somebody having one star, so it's worse than the three star in some ways. The three-star one is just a company that we have really known for 5 years or more and we guarantee that business quality there for a longer period of time.
Martin Hurych
You said that there are some criteria, I assume they are publicly available, because I think it's quite a sensitive thing to be screened. So what was the first reaction from the community when you put something like that in place?
Martin Kovalský
You could say that the introduction came after the initiative of companies in our community. They said that they met someone from the Czech Cool Trade community at a networking event and automatically assumed that we guaranteed them a certain quality. So we thought we should take a look at it. There were a couple of times when the company didn't do their job well and we don't want that within the corporate community, so we had to end the cooperation. It's not a lot of cases, for 350 companies it's maybe 10 cases in 10 years, so it's not many. So basically it was an initiative from the companies in our corporate community that we should give some framework to it, that we should put some methodology in place and that they would appreciate it if we would also appreciate that somebody is with us for a longer period of time.
When will the CCT be in London?
Martin Hurych
Last question, when will Czech Cool Trade be in London?
Martin Kovalský
It's my goal. As they say, in life you are supposed to have dreams and goals and this dream is currently becoming a goal. Czech Cool Trade's goal is to really create a European corporate community within the next decade and then that office will be in London. Then, Martin, I will invite you.
Martin Hurych
So the second part will be in London. Fingers crossed that it's a success, because that's a really ambitious boulder.
Martin Kovalský
Thank you very much and I believe that we can do it together.
Martin Hurych
Today it was about grants, networking and in a broader sense business development and the business community with Martin Kovalský. If you've got a burning desire to become a part of Czech Cool Trade, or any other business community, Martin and I did an exceedingly good job. Be sure to check out my website for the bonus, which will be in the Ignition section below this episode. Be sure to like, because without likes the world won't know about us, so like and subscribe right after you finish listening. All I can do is keep my fingers crossed and wish you success, thanks.