Running a Business in Bulgaria For this entrepreneur, having his operations in another country makes perfect sense.

When John Hazlewood told one of his advisors he was planning tohire a team of Bulgarians to build and operate his online travelcompany, the advisor thought he'd lost it, according toHazlewood. Today, with TheStoreMaker.com up and running, Hazlewood isproving that basing his high-tech business in Bulgaria makes sense.The small country, located near Romania with access to the BlackSea, has a tradition of high-tech skills dating back to when it wasa communist nation.

"During communist times, Bulgaria was producingcomputers," said Jonathan Kimball, desk officer for SoutheastEurope at the Department of Commerce in Washington, DC. "Now,with access to Western technology, their engineers can be highlyvaluable to American companies. There are opportunities, especiallyin the high-tech field, because of their highly educated workforce. This, combined with the low labor costs and close proximityto Europe, creates many opportunities for U.S. companies inBulgaria."

Hazlewood didn't just wake up one day and decide to open abusiness in Bulgaria. Before becoming an entrepreneur, he was asports agent, and he had met and worked with many Bulgarians andwas impressed by their drive and competitive spirit. In 1994, herecruited the Bulgarian national soccer team to train in Austin,Texas. The team surprised everyone by ranking fourth at the WorldCup competition that year.

The Bulgarians' technical expertise, coupled with low wagesand an eagerness to work with Americans, convinced Hazlewood tobase his company in Sofia, the capital, rather than San Franciscoor Austin, where his accountant, attorney and advisors live.Because the company builds free Web-based travel stores, it couldbe based anywhere. Just about anyone with a Web site can apply tosell travel products.

"You can buy travel products for yourself and keep 30percent of the commission or sell products and services toothers," explained Hazlewood, who has signed up about 1,000Web sites so far. The company has relationships with 455 airlines,200 hotel companies and 44 car rental agencies, according toHazlewood, who spends about two-thirds of his time in Sofia. Hesaid his company keeps expenses low because his overhead is aboutone-tenth of what it would cost in the States.

Kimball, who has visited Sofia a few times, said Bulgaria isalso politically and economically more stable than many of theother countries in the region, and it's very cheap to livethere. Hazlewood says he pays $250 per month for a two-bedroomapartment in downtown Sofia. And Sofia is easy to get to: It'sa two-and-a-half-hour flight from London.

Hazlewood began recruiting workers through help-wanted ads inBulgarian newspapers. "All the people we interviewed hadmaster's degrees and doctorates," recalled Hazlewoodduring an interview in New York City. "The average salary was$150 a month, and we were offering $500." Today, thecompany's 30 Bulgarian employees do everything from Web designand programming to providing customer service via e-mail. Hazlewoodoutsources some telemarketing in the United States but has noAmerican employees.

Hazlewood credits much of his success to the financial and moralsupport of experienced investors like Bobby Inman, a retired U.S.admiral and former director of the National Security Agency. Inmanalso served as deputy director of the Central Intelligence Agencyin the early 1980s. "Admiral Inman was the person whoencouraged me to pursue it once it made sense," saidHazlewood.

Inman, who remains in close contact with Hazlewood, saidhe's happy with the company's progress so far."I'm attracted to investing if I like the technology andthe people are interesting and hardworking," he said."John had friendships and contacts to rely on. It was alsoclear that there was a very significant pool of talented people,and if they didn't know the latest systems, they had the skillsand the drive to learn them quickly."

Inman, who has invested in several high-tech companies, says heis comfortable backing an overseas venture. Because he sits on theboard of directors of several multinational corporations, includingthe Fluor Corp., which has extensive operations in India and thePhilippines, he knows the advantages and disadvantages of doingbusiness abroad. "The English language competence in Bulgariaisn't as high as it is in India, but there are people who arefluent, and you aren't writing software code in English,"said Inman, whose Austin-based Inman Ventures has provided seedcapital for two of Hazlewood's ventures. (Inman declined to sayhow much money he has invested in Hazlewood's firms. The firstcompany Hazlewood launched was sold to a German company).

Inman said the U.S. Embassy in Sofia has been helpful and"the Bulgarian government is friendly toward these[entrepreneurial] activities. You pay taxes, but they are notexorbitant."

Before the Soviet Union disbanded, its various states were knownfor producing different products. Inman said Czechoslovakia, forexample, was the center of rifle-making, while Bulgarian engineersdeveloped software for the government. "Many hackers are fromBulgaria," said a business expert familiar with the region."Bulgarians also reverse-engineered Unix and other operatingsystems."

In 1996, the socialist government resigned after inflation hit500 percent and the banking system collapsed. The currentleadership, known as the Union of Democratic Forces, implementedfinancial reforms, and although times are still tough for manycitizens, analysts predict the incumbents will be re-elected. Toencourage more U.S. investment, especially in the high-tech arena,one analyst said Bulgarian officials apparently agreed to work withMicrosoft to buy legitimate rather than bootlegged copies ofMicrosoft products.

Sofia, which has a downtown district paved with faux goldbricks, has a lively café society and many good restaurantsserving wine of such high quality that it is banned for sale in theEuropean Union, according to an analyst familiar with the country."It's also a very safe place to work," saidHazlewood. "I'm out at 2 or 3 a.m., and I feel verysafe."

Despite the demise of many e-commerce businesses, Hazlewood isoptimistic that TheStoreMaker.com will continue to grow and remainbased in Bulgaria. "Our chief operating officer is nowplanning to spend 50 percent of his time over there," saidHazlewood.

If you are interested in doing business overseas, contact theU.S. Department ofCommerce's International Trade Administration. ITA deskofficers are familiar with business operations in hundreds ofcountries and can offer insights, information and resources.

Jane Applegate is a syndicated columnist and the authorof 201 Great Ideas for Your Small Business. Fora free copy of her "Business Owner's Check Up," sendyour name and address to Check Up, P.O. Box 768, Pelham NY 10803 ore-mail it to info@sbtv.com.Sarah Prior contributed to this report.