Business problems are better solved together – do you agree? Here are two stories of entrepreneurs looking for a way out of a difficult situation. One fails to find clients, while the other has so many of them that there are even more problems. The solution to these is typical! – they were looking for problems on the air together with the leaders and experts of the “Working Group” project.
Organizers of the project “Working Group” – “Pro business” and Pro Retail
Spring season partner of the “Working Group” – Alfa-Bank (Belarus)
On the air of the Working Group project, the hosts Vitaly Volianyuk and Yevgeny Vyatkin discuss hot issues of concern to entrepreneurs. Business experts help them in this. In the new spring season, owners of companies who need to resolve a difficult issue also become project participants.
In the first edition of the new season, the experts were Alexander Pankov, Managing Partner of the Here and Now CG, and Alexander Brilenok, Director of Human Systems. Watch the live broadcast and read how the hosts and experts solved the business cases of our heroes!
Case 1: “Feeling the ceiling”
SkyCross.by – restoration workshop for shoes, accessories and outerwear. At the start of the business, the owner, Aleksey Kalinchuk, invested $ 20,000. The first 60 m² workshop was launched on December 1, 2020.
- The target segment is an audience with an average and high income. Basically, shoes costing $ 200-300 per pair pass through the hands of the masters. But they also know how to handle expensive models for $ 2000.
- The average bill is 41 BYN. ruble ($ 15.6) per pair
- Staff: 8 foremen, 2 administrators, accountant, marketer, targeting specialist – outsourced
- The nearest plans are to rent one more workshop of 140 “squares”.
Business growth has exceeded the founder’s expectations. The project reached operational payback from the first month. In December 2020, the workshop processed 280 pairs in the pay-as-you-want mode and gained 7,500 bel. rubles ($ 2800) – this was enough to cover current costs. In February, with the same production volumes, 273 pairs, net revenue doubled to 15,900 Belarusian rubles. rubles ($ 6000). In February 2021, the workshop issued 546 finished orders in the amount of 22,500 Belarusian rubles. rubles ($ 8500).
So what’s the problem?
The entrepreneur wants to expand production and grow while maintaining the pace. Now the workshop is working at full capacity seven days a week, all profits go to development, but this is not enough. The business has reached the stage when it is impossible to “get” more funds from the turnover, and their money has already ended. Where to get finances in order to continue growth, and how to establish business processes so that you do not lose what you already have due to scaling?
Here are the solutions proposed by the experts of the “Working Group”:
Solution 1. “Grow” the masters… The first limitation of development is the narrow market for specialists. All over the country, according to Alexei, there are about 30 professional shoemakers – and 8 of them are already working at SkyCross! Since last year, Belarus has stopped training shoemakers in principle, because shoe production is being closed.
The Working Group experts made a recommendation – to build a clear training system: how an employee gets into the company, intersects with the knowledge base, what checkpoints it passes. For each stage of production (cleaning – repair – painting), you need its own training program and the time frame for which you can go through it together with the curator. Further – certification. The category of the employee and, accordingly, his salary will depend on the level of knowledge and skills. Beginners will be motivated to improve their skills in order to take on more complex orders and get more.
Cons of the solution:
- Long. The mentoring system will have to be built from scratch: create programs, perhaps shoot video tutorials, rebuild the workflow – and all this will fall on the shoulders of the manager.
- Expensive. At a minimum, you will have to budget additional funds for allowances for masters for training 2-3 specialists. As a maximum – to increase the production area to accommodate new employees and equipment.
The last disadvantage leads to the following problem – where to get money?
Solution 2. Calculate ROI and understand what you want in the long run… On what investments to develop – slowly, but on your own, or on borrowed, but quickly? On the one hand, I want to scale without losing momentum, on the other hand, there is a fear that the growth will be too sharp.
SkyCross has recently launched a new workshop that will be able to serve twice as many customers. According to preliminary estimates, to expand and open reception centers around the city, you need $ 80,000-100,000.
For a bank loan, the business is still young – its credit history is not even half a year. From the point of view of serious investors, he, too, is not yet of great interest. And for business angels there are more “sexy” topics than shoe repair.
Experts voiced that it is highly likely that it will have to grow through grants, business assistance programs or borrowed funds. And raise prices.
With a profitability of 35-40% with a good credit history, you can get resources from the bank. But it is better not to add yourself to “money steroids”, but to develop in stages: we expanded a little, saw that the hypothesis was working, and went further.
Solution 3. Develop a courier service… What business model to promote – courier service or shoe collection points in shopping centers and other public areas?
SkyCross was the first in the country to offer free delivery of shoes to the workshop and back to the apartment. Now the workshop has one point in Minsk, where the courier brings orders from different parts of the city. If you count, it’s profitable – you don’t have to pay bored receptionists. But while a person goes to the reception center, his shoes wear out more, which means there is a chance that he will hand over not one pair for repair, but several at once.
You can develop both directions in parallel and gradually transfer delivery to the category of premium services, make a check on this. Towards spring, offer a comprehensive cleaning and preservation of all winter shoes until the next season. Bringing 5-6 pairs of shoes to a shopping center is a whole tragedy, here a courier will be very useful. All other things being equal, courier service seems to be more advantageous for the experts of the Working Group.
Case 2: No Pain – No Profit
Entrepreneur Artem Gretsky – the company Zaryad.by – has been supplying charging equipment for businesses in the HoReCa segment, medical centers, gas stations, IT companies and advertising agencies since 2018.
- The company has delivered stations to 120+ clients
- The average bill is about 1,000 Belarusian rubles. rubles ($ 381)
- 5-6 trades per month
Now Zaryad.by is experimenting with directions: it is trying to create its own stations (charging barrels and charging towers) and develop a software portfolio adapted to the needs of the Belarusian market.
The task is to reach 15+ transactions per month and develop our own production. There are not many B2B clients on the market. Those who scale their network and buy charging stations again are even fewer. Not all of them understand the value of the company’s products. Everything that Zaryad.by produces is about new service standards. If a client comes to your institution, he knows that he will not be left without communication and will be able to do business.
In Belarus, this picture breaks down into the phrase “you can’t charge it here, let me take it from you and put it on charge somewhere”. At best, “somewhere out there” is behind the bar. The client begins to worry about the safety of the gadget and loses a working tool. In Minsk, only now there is a trend towards sockets near tables, when in Russia they are already switching to sharing power banks. In shopping centers, fandomats are displayed, in which you can borrow a charger for temporary use for 50 Russian rubles. This is a completely different business model, which has its own limitations: download an application, turn in a powerbank at a specific location, and a user fee.
What to do with problem number 1 – lack of pronounced “pain” of clients?
“The phone got down at the most inopportune moment” – the pain of an individual, not a legal entity, who in fact buys charging stations. For the latter, this is not a question of basic service, but of high standards, which is closer to the premium segment. If a client came to his favorite restaurant, ordered food, noticed that his phone was dead, they could not help him with this, and he left without waiting for an order – this is a pain. And while there is no such demand for chargers, any institution will find other options how to spend 1000 bel. rubles ($ 381), especially in times of crisis and cost optimization.
The decision of the “Working Group” is to change the business model and the portrait of the key client. Under the existing business model, the company offers its products through direct sales. But recently, Zaryad.by began testing the rental niche – offering customers not a charging station, but an advertising platform. This is a unique service that will help you reach your audience natively. A pilot project from the Lacalut brand was launched in the dental network. Branded charging equipment was displayed in the waiting rooms so that patients could spend time comfortably while waiting.
This move will work great in any traffic places. The results of the campaign can be tracked through statistics on the number of charged devices and adjust the fee.
You can get recommendations on the development of YOUR business in the new issue of the “Working Group”! Describe the question you would like to sort out and send it to [email protected] marked “Working group”. We will invite the authors of the most interesting questions to the studio!
Partner of the spring editions of the “Working Group”