The idea of establishing a business in the production shop format typical for Lviv has been naturally conceived, Yurashky pryanik production shop’s co-owner Illya Verkholiak says. But the concept and all business processes have been developed from scratch, as well as the product itself.
Yurashky pryanik production shop in Lviv has been in existence for four years. On the one hand, it is a sort of a pryanik showroom featuring, in addition to sales, pryanik baking and decoration master classes. But on the other hand, it’s a quite powerful production facility employing almost 100 persons and producing thousands of various sweet treats every day. In his interview to Business Together special project, the Yurashky co-owner told us the story of how his business grew in the already-crowded market, and also, why small businesses should pay attention to support programs available in Ukraine.
Did Yurashky operate as a pryanik production shop from the very inception?
No. We started in 2014 with a vending stand at a Christmas fair. Wanted to see whether our product finds its place in the market, and saw that this idea has to be furthered.
We decided to operate not like a regular store but like a kind of a showroom that combines sales, master classes and a café.
Did you employ bakers from the very beginning, or your family did the baking at first?
We engaged specialists. However, everything we offered was run by us, our team and families; our special expert was my one-year-old son.
How long did it take to transform a vending outlet into a cookie production shop with a hundred employees?
About a year.
What happened during that first year? What did your business project look like?
We were regularly selling cookies at fairs in Lviv, and not just during holidays. My partner and I have another business: we make various souvenirs (wooden and ceramic items, magnets, handmade toys — editor’s note), which we have been selling at fairs for some seven years. Therefore, one could say that the organizers are our partners.
When you opened your pryanik production shop, has this production format been already in existence?
This format of selling sweet baked goods has already existed, so we haven’t invented the bicycle.
We offer two master class formats. First, children glaze the pryaniks, assisted by artists. Second, the baking itself, where bakers help mix the ingredients, knead the dough and bake, and only then comes decoration of pryaniks.
How difficult it was to make your name recognizable and gain loyal customers who identify the Yurashky brand?
We did not think about the difficulty but simply worked on creating a quality product; we never stopped in our development, learning a lot.
Who are your audience: Lviv citizens or tourists?
Both the townsfolk and tourists. Kids find it interesting here: they receive positive emotions during our master classes. This is not like playing on a smartphone: here, children turn on their imagination and work with hands, so parents like our format.
What were the most difficult periods in the establishment of your business?
We began in 2014, during a difficult period for our country. These events were psychologically stressful, and on top of that, economic factors, such as the diving hryvnia exchange rate, had their effect.
The hardest task was to gather right people around us. I do not look at a person through the prism of their education, age, etc.
A lot of those who worked here in the beginning have later quit, and a lot of new people came. It’s a natural process. But gradually, the number of employees was growing, and new departments were created. At first, we didn’t have a marketing or a personnel selection department, and now we do.
What was an impetus that kept you going?
Firstly, we have already had prior experience: another business, a chain of souvenir shops that for seven years has been selling souvenirs in the Carpathians, Lviv and the Shatsky Lakes.
Secondly, we participated in the European Union’s project of supporting Ukrainian small businesses and received funding for installation of accounting and audit software. The project continued for one year. We selected a contractor, and after the project ended, the European Bank for Reconstruction and Development refunded 70% of the contractor’s fees. Thanks to the new system, we were able to organize and systemize the entire financial and production information, from inventory to wages. The project’s cost was between 12 and 15 thousand euros.
FYI: view details of the access to funding at EU4Business.
EU4Business is a EU initiative providing support to the private sector in Eastern Partnership states, including Ukraine. Its purpose is to improve business climate via professional advice to small and medium-sized businesses and access to funding. Assistance under EU4Business is provided together with other organizations.
In fact, it’s a great opportunity. I didn’t even know before that there are programs like that in Ukraine. They are very important for entrepreneurs, especially for beginners.
Is there something in your model you will definitely not abandon?
We make cookies by hand — that’s our philosophy, and we will never abandon it.
There are technologies allowing to launch mass production, to install, so to speak, several printers and several operators and produce ginger pryaniks with glazed patterns. But for me, it is a matter of principle that we make our products by hand.
In the beginning, we had only five artists who decorated pryaniks; now, we have 70 of them. In total, we employ over 100 persons.
What is your production output?
Over 2 thousand pryaniks daily. Surely, there is a seasonal factor. Pryanik is a rather Christmas product, and therefore, we make more of them in wintertime. Tourist activity has its bearing, too. When winter comes, corporate orders are rising, accounting for almost 20% of all orders. For instance, we worked with OKKO in the past, supplying our products to 400 of their gasoline filling stations across the entire Ukraine for a certain period. We developed a special Christmas- and Easter-themed pryanik series for them.
We were very pleased to see our products somewhere far away in the Transcarpathian region, near the border with Romania.
Among the most interesting orders was this: for commemoration of the city day, we built the largest, three meter-tall cookie house, later included to the Book of Records of Ukraine. People were coming inside it, and even tasted it!
Do you experiment a lot with pryanik flavors?
We are trying to stick to the main composition of our product, working according to the same dough flowchart: by 80-90%, it’s the same product. But we always experiment, currently working on creating a hot pepper pryanik.
How did your production increase the last year versus the preceding one?
We grew by some 30%. The sales turnover right at our production shop in Lviv has increased.
We also sold a franchise in Kyiv, found a partner operating in the format of islands at retail centers, and increased our external sales.
Was it hard to find a partner in another city?
The difficult part is to find a person who would care about the product and idea, focusing not just on numbers and profitability. I have a clear perception and understanding of who our potential partners are.
We constantly have meetings and discussions. Recently, we had talks with a potential partner in Truskavets.
But one of the difficult parts in clinching deals is that our product is not a necessity good but rather an emotional purchase.
Therefore, when the purchasing capacity of people declines, so does the interest from potential partners. But I never get fixated on turn-downs.
What cities are of interest to you in terms of business expansion?
First of all, cities with over a million population. The purchasing capacity there is higher, and they receive more tourists. Presently, we only have a partner in Kyiv.
And what about the opportunity to enter foreign markets?
We are thinking about it. We even had a partner in Europe (a retail chain in Poland) selling our pryaniks. We also had talks with a German family regarding franchise (we met them when they came to Lviv and visited our shop).
Before fully entering a foreign market, I believe it is necessary to spend at least a few months in that country.
It would help understand business conditions there, and get the sense of the mentality of local people, which is very important.
Did you need certificates to sell your products in Poland?
Our partners handled that. But we do have all certificates required in Ukraine. We confirmed the conformity and safety of all ingredients: flour, eggs, butter, etc. We also have certificates for the finished products.
What would you recommend to Ukrainian entrepreneurs?
To be an entrepreneur means to believe in yourself! Never lose the belief in yourself, and be more socially active. And don’t forget that we and you are creating a new economy of our country; we are developing a new society right now.
By Iryna Gudz
Source – Delo.ua