WE WILL CONQUER BULGARIAN CUSTOMERS WITH OUR APPROACHES - OLEKSANDR SOKOLOV FROM THE SE MBA PROGRAM DISCUSSES BUSINESS EXPANSION TO BULGARIA
02 August 2022
“When life gives you lemons, make the lemonade,” Oleksandr Sokolov, founder, and CEO of the Smilefood brand and MIM-Kyiv SE MBA student has successfully tested this saying. His products well-known to customers in Odesa, Kyiv, Mykolaiv, and Vinnytsya are now available in Sofia, the capital of Bulgaria.
Oleksandr shared his Bulgarian experiences, as he is having his first out-of-Ukraine success.
- Ukrainian market has been shrinking and our entrepreneurs are looking for opportunities outside the domestic market. Why did you choose Bulgaria?
- It is our deliberate choice. I researched Chisinau, Romania, and Sofia. I decided on Sofia because it was relatively easy to adapt to my team. While people were arguing about Ukrainian and Russian, very few studied English. It is difficult to adapt to living and working under new conditions without speaking the language. That’s why we decided on Bulgaria. Secondly, the taxation system is easy as well. Thirdly, Sofia is in the EU and has two million inhabitants. Logistics is very convenient as well. So, we launched operations there.
- In other words, the ease of your team relocation was the decisive factor, wasn’t it?
- Team relocation was crucial. You can’t drive a car with one wheel. You may have the best engine, the most luxurious interior which you enjoy, but you can’t drive it. Business is very similar in that respect. You can’t do the company without the team.
We relocated nearly 10 people with their families, namely our top managers from Odesa, heads of departments, line staff, and cooks. We recruit couriers from Ukrainian who moved to Bulgaria. So far, we are recruiting Ukrainians as we do not speak Bulgarian. The language barrier is a serious impediment to doing business outside Ukraine.
- Is registration seriously different from the Ukrainian procedures? Can we compare those practices?
- You know, business is not about money, it is about people. I was lucky because I used to have paint and varnish materials distribution business. I made friends in Sofia, and some of my business partners live in Sofia. They referred me to a lawyer who assisted with a legal address. It is impossible to start a company from the scratch in Bulgaria. To do so, you need to rent an office. To rent an office, you need to have a registered company. It was the first challenge.
Secondly, people do not want to rent properties to Ukrainians because they are afraid that we are leaving in several months. It was like the situation of 2014 when people from Donetsk and Luhansk regions were flooding Kyiv or Odesa, but we did not care much. This time it is not our skin in the game.
We did not have any problems with the registration. We had to deal with a huge number of documents. Our company has the HAACP certificate confirming the quality and safety of processes. It is valid globally. If not for all the documents, we would be open until the New Year. But our well-established process confirmed by appropriate international documents allowed us to open and launch the operations in a month. Thus, appropriate certification valid in the markets of interest is my first advice to all businesspeople who have plans to enter other markets.
- Is your menu in Bulgaria different from your menu in Ukraine? If different, what did you have to change?
- We had two options at first. All our consultants participated in the opening. Locals said that we need to alter our menu. I decided on another approach. We recreated the same tastes as in Ukraine using local ingredients. Rice, fish, condiments, you name it is different here. But we managed to have the taste as in Ukraine. I think I was right. Everyone likes our tastes, and we can control the quality.
I am sure of our success. We analyzed the market and reviewed the sites and apps. We also surveyed the suppliers and visited the outlets. Our quality is superior. Moreover, we are used to considerably tougher competition.
- What do you mean by that? Is it about more demanding customers or a more saturated market?
- I think that there are more entrepreneurs in Ukraine than in European countries. At home nearly anyone who worked at some outlet launched its business. It is often a family operation. There are practically no entry barriers in Ukraine. And it may be very deteriorating for the food market. You can’t do anything like that in Europe. If you want to launch a food business, you need all appropriate certificates, open a company, get a license, have medical documents, conclude agreements with all utility companies and regulators, pay rent for 3 – 4 months in advance, etc. Everything is regulated here unlike chaos in Ukraine. Back home, you sometimes cannot understand who is offering what, the address is not clear, no proper documents, etc. It is going to be difficult for us in Ukraine because we plan, get certificates, follow the ISO 9001 standard, etc. Our competitors offer the products at dumped prices. Why? You can sustain yourself in the market for longer than 4 months! The competition in Bulgaria is regulated and clear. It is interesting to work in this kind of market.
- Your pace here might be different as well.
- Yes, there are certain features. E.g. we do not have online banking yet. We have been establishing it for 7 weeks. Obtaining a “beautiful” IP-telephony number took us 5 weeks. In Ukraine, it was a matter of an hour. You’d better adapt to it. Business here is a long-term undertaking. You cannot test things here. For example, you can get online banking, if you can guarantee 30 thousand euros of turnover a month. Otherwise, they cut you off. Mobile terminals are available under certain obligations as well. In 9 years of running our business, we got used to those features. We also accept that the pace is slower here.
- You are proud of your positive comments. What can you tell about Bulgarian customers? Are they more demanding? Is your offer new and exciting for the market?
- Because of technicalities we did not have a grand opening yet. For example, we also did not know how local suppliers operate. Here you cannot order for tomorrow. Business requires longer-term planning. Our call center is in Ukraine. It took us two weeks to finetune the ordering. We are officially opening in September, but we announced that we worked. We started because people were asking when they can order. We still do not have enough couriers. Our IT director, marketing director, and sometimes I dispatch orders. People were expecting us. I think that with our quality and approaches obtained in 9 years of work we will conquer Bulgaria.
- What would you advise those who think about entering foreign markets?
- The same I would have advised myself last December. Translate your site into English. Translate your packaging into English. If I knew about the war, I would have done the SWOT analysis and started planning things in October – November. Here translation, adaptation, packaging, etc. is expensive. A lot of things could have been done earlier. My other advice is to study English. I am fluent enough, but I take private lessons because I deal with investors, advertisers, IT people, and partners. You need to be truly fluent to handle the communication.