Profits fell by 80%, but the business survived: the experience of an entrepreneur who left Russia

The wave of emigration has led to the closure of many business projects.
It seems that one's own business online is the key to preserving the business if the manager or team leaves. But is this really the case? We talked to Ekaterina Zakharova, the founder of the MOD Conf project, about this.

Opening a business in events before the pandemic and not dying

Entrepreneur and PR-specialist Ekaterina Zakharova held more than 100 events for hire, having worked as an event-manager and producer for more than 10 years. She had long dreamed of owning her own business, but impostor syndrome prevented her from doing so. In January 2020, tired of putting it off, Katerina launched MOD Conf.

"It is an edtech project that combined three areas: industry conferences for HR pros, corporate training and master classes on soft-skills. For example, work with burnout, time management, and critical thinking development", - says Ekaterina.

According to the entrepreneur, despite the fact that she started her business before the pandemic, she immediately decided to focus on online. On the one hand, because she was tired of being tied to specific locations, which is inevitable in offline events. On the other hand, I realized that the event and training industry was moving to the Internet.

Among the corporate clients of MOD Conf are Gazprom, MTS, DOM.RU, Rostelecom, Mosenergo, Bauer, Lenta, Ascona and other companies.

Ekaterina's project team in 2021 was 10 people, not counting business partners and providers. These are the payment service, website developers, and representatives of the platform, which was responsible for broadcasting events that required more complex solutions than ZOOM.

Growth and new crises

After the pandemic, by the spring of 2021, MOD Conf began to grow: the number of events (the team began to hold one event a month) and the audience increased. The team grew to 10 people. At that time the team had five sales managers, two producers, a marketer, a tagger, and an accountant.

However, as the team expanded, Catherine noticed that her workload was growing, in contrast to the profitability of the project. In each of the areas in which employees were hired, weaknesses were discovered. Therefore, in the work of subordinates constantly had to intervene. After analyzing the productivity of the entire team and the productivity of everyone, Catherine concluded that she had to say goodbye to part of the team. Then the first stage of optimization took place: 5 people stayed in the team.
After the optimization Mod Conf faced a new crisis, this time external. In the summer of 21-th on the event market came partly seasonal, and partly postkovidny slump. Many Russians went out of town for a long time or started visiting post-pandemic countries. Catherine's team spent a lot of resources to sell tickets to and host events that were scheduled for the summer. They had to cut costs again and say goodbye to some of the staff. By the fall and winter of '21, the manager and staff had picked up with fatigue and burnout.

Is there life after February 24th?

MOD Conf held its last event before the special military operation on February 17. The next one was scheduled to be a conference on ESG: Lean Environment and the concept of sustainability in business. Then came the 24th of February.
After the SMO announcement, experts predicted a 35-40% drop in the online education market by the end of 2022. "Those who were going to buy courses decided to buy appliances," Kommersant wrote.
To make her decision with a cool head, Catherine turned to a tried-and-true method: she set about calculating metrics and analyzing labor efficiency.
She then called her team and announced that there would be problems with work in the near future. The political events would not go away for business, so it was impossible to give guarantees that the demand would continue in the coming months.
The conference decided to cancel, as conservation issues were of little concern to the audience at this point. There were two employees left on the team, other than the founder, and those were not full-time, but on a service contract.

How MOD Conf restructured the team

It was decided to focus on inbound sales. This allowed to abandon the "sales people" specializing in the search for outbound clients, and was more in line with the situation. According to Catherine, at that point people became more annoyed with outbound sales than before. The negativity of cold calls and messages with offers to participate in conferences increased, the response decreased.

The average check for MOD Conf services dropped from 20,000 to 8,000 after the special military operation began.
Since most of the ways of promotion through search results and some of the social networks stopped working, Ekaterina gave up the services of a targeting specialist and began testing new social networks. The team tried to make itself known on Tenchat, Vkontakte and Telegram.

"In our case, Tenchat did not prove to be a successful promotion channel. For example, next to our expert posts were ads for refrigerator sales. As for Vkontakte, there was a hypothesis that part of the expert audience from Facebook would go there, but it did not work out.
Telegram turned out to be the most promising platform. Now we are putting all of our content production efforts here, and we will advertise here as well.
In addition, I began to maintain my personal telegram-channel to promote my personal brand, as in my field - hr, events, pr - this is very important.

Business Moves

In March, Catherine and her husband moved to India, to the state of GOA. According to her, they chose the country for the affordability of doing business, and the ability to leave quickly, not for fabulous money.
How many entrepreneurs have left Russia?
There are no exact statistics.

However, according to Forbes, the number of applications for legal and technical assistance in the relocation of technological businesses to Great Britain alone has tripled. Most applications were from users from Russia (65%). Data for other countries were not collected.

Total Rosstat reported 419 thousand who left Russia from the beginning of the year to September 2022. After the announcement of a partial mobilization, according to Forbes, 700 thousand people have left the country.
One of the options Catherine and her husband considered for relocation was Latin America. After the recertification it turned out that it was very difficult to open a legal entity there, in addition, the tickets from Russia cost an average of 500 thousand rubles. In the end, the choice was made in India. After the move, the entrepreneur is going to open a legal entity in the new place. Registering a sole proprietorship in this country is not the easiest thing to do. By doing so, the country wants to protect itself from fake legal entities set up to launder money and provide employment for its citizens.

How to set up a business in India

Now the entrepreneur continues to accept payments from her Russian account, but she wants to give up her Russian IP and taxation as soon as possible. This has not yet been possible because of local bureaucracy: in India a current account is opened quickly, in 5-7 days, but a bank card takes 3-4 months to make. The card is needed to pay for the services used by the business.
Two years ago, almost all Indian banks issued Visa and Mastercard cards, but now they only offer the local Rupay rupee card. The reason for the refusals, according to Catherine, is unclear: either the lack of chips, or a prejudiced attitude toward foreigners. The local card can be used to pay for orders at local marketplaces and stores, but it cannot be used to pay for international services (e.g., Zoom, Google Ads).
This problem is solved by registering a company in India. If an entrepreneur has a registered legal entity, a PAN card (taxpayer ID) and an AADHAAR card (identification card valid within the country), he can apply for a bank account for the company and get a Visa and Mastercard.

After understanding the legal intricacies, Catherine learned that in India it is possible to open a company without involving a citizen of the country as a founder.
Two foreign founders (in this case Catherine and her husband) staying in the country for more than 180 days are enough. After this period is over, the person is considered a resident of the country.
The creator of MOD Conf decided to choose this option because it eliminates the risk of inviting unfamiliar people as founders.
If an entrepreneur who has moved to India wants to continue to run his business, only one type of company is suitable for legalization - Public Limited Liability Company.
The amount of tax for this type of company corresponds to 30%, but is reduced if there are locals in the state. VAT can vary from state to state.
In comparison, a non-resident of the Russian Federation, if he continues to conduct business in Russia, is obliged to pay 30% tax.

What's Next

After the beginning of the mobilization in Russia, the activity of the audience sharply decreased. In October and November, the company held two free master classes for the Russian-speaking audience: about combating burnout and work/life balance. After that, the founder of the company decided to focus on corporate training and not to work with external audiences for the time being.

Upcoming tasks:
  • Opening a legal entity in India.
  • Pilot online master class for the Indian market.
  • To analyze the relevance of the training topics (most likely, HR, communications, time-management, self-management are going to be among the topics).
  • Selection of expert speakers from India on the topics of personnel management and business in general.
  • preliminary work with the Russian-speaking teacher-speakers from MOD Conf to prepare the master-classes in English for the foreign audience.
  • a conference for foreign specialists in English.

According to Ekaterina, if the project in India launches and is successful, she plans to start hiring locals over time, because labor is inexpensive in the country. In addition, she is enthusiastic about the idea of creating an educational project in the local market, as there are many free niches there. One example is Khan Academy, which was launched by a native of India. This online school has become one of the first highly successful edtech markets in the world.
"We have a plan to enter the Indian edtech market. But we take into account that India is a very unpredictable country, and it is difficult to plan something long term here. We will have to improvise on some things. The main goal is to enter the global international market for online education," says Ekaterina.

Advice from an entrepreneur who wants to keep her business after she leaves:
  • Minimize the number of obligations (reduce the staff, transfer subordinates from full-time to contracts on the volume of services rendered)
  • If possible, leave a reliable employee or partner in Russia who can provide backup or take over the paper work (in MOD Conf it is electronic, but some partner companies ask for paper documents)
  • Consider new areas of work for yourself. For example, before the beginning of the NWO, the company cooperated only with Russian speakers and experts from the CIS countries, the USA and Europe, but never looked in the direction of Asia. In the current situation, this direction seems the most promising to the founder of the company.
  • Gather information in advance about the country where you plan to relocate.
  • How the services needed for your business work there
  • How easy it is to get a local bankcard, and what you need to do
  • How cryptocurrency is treated
  • Is it possible to get a local id, open an equivalent of a sole proprietorship or a firm under a simplified scheme, etc.
  • What types of businesses get "zero tax" or can operate under a light taxation scheme (most often such benefits are available to IT-companies, knowledge-intensive enterprises, fintech projects).
  • The sooner you find this out, the easier it will be for you to adapt and start your own business faster after relocation.