It is worthwhile to do internship in Europe even in order to see the experience of others, compare opportunities and learn practical approaches to classic business theories, because entrepreneurship is a non-stop learning. Definitely, Ukrainian business schools provide a significant theoretical foundation to those who wants to learn business processes. However, not always they can ensure a practical experience that supports creativity, ability to invent and think out of the box, as well as create personalized organizational culture.
There are many initiatives in Ukraine aimed at teaching the newcomers and entrepreneurs effective business instruments. In the last years there are several business schools in the market of educational services that provide young entrepreneurs with important knowledge in key areas: economics, marketing, accounting, etc.
After learning the theory, it is important to strengthen the knowledge through master classes or coaching and following more experienced entrepreneurs.
The European Union supports the development of Ukrainian business and creates new opportunities for small and medium business. EU4Business, a comprehensive initiative of the European Union, is in place in Ukraine for ten years. It incorporates a number of programs for entrepreneurs that allow getting effective access to the markets, funding, business regulation and, in particular, to knowledge.
Erasmus for Young Entrepreneurs (EYE) is among them. This is an international exchange that provides entrepreneurs with an opportunity to learn from experienced managers of small business in other countries – members of the program. Entrepreneurs that reside and work in 28 members states of the European Union, as well as Albany, Armenia, Bosnia and Herzegovina, former Yugoslavia Republic Macedonia, Island, Montenegro, Moldova, Serbia, Turkey and Ukraine, can participate in the program.
If the business is less than 3 years or you just plan to launch your own business, EYE gives an opportunity to go to the EU country for 1-6 months to gain the experience of running a similar business. Such business exchange allows improving both theoretical and practical foundations, leave the comfort zone and even reconsider own business.
This is what happened to the family of entrepreneurs from Zaporizhzhia Oblast, owners of “EcoTechno Innovations”. Kostiantyn and Victoriia Kutyk has been dealing with installation of solar panels for private homes for 3 years. Kostiantyn was encouraged by his previous work experienced: he worked in the field of installation and maintenance of transformer equipment.
“The green energy field was close to us as before I worked in the energy area, therefore I had just to change my qualification a bit. New times are coming, and we need to change our vision and look for available niches”, says the entrepreneur.
During the first year of work the company signed no single contract due to non-competitive and slight overpricing for its services. However, soon the situation has changed for better.
The alternative energy market of Ukraine develops rapidly, therefore entrepreneurs have to overcome new challenges all the time. For instance, under the information of the National Commission for State Regulation of Energy and Pubic Services in 2018 Ukraine increased the number of installed alternative energy sources by almost three times comparing to 2017. The major growth, almost by twice, happened in the field of home solar power stations, which is the business of the family of Kutyk. In 2018 Kutyk’s family joint EYE program and visited Lithuania. This trip enabled them to reconsider their approaches to business and start working in a more effective way.
The entrepreneurs told about the results of their training with European colleagues to project “Business Together”.
How did you find out about Erasmus for Young Entrepreneurs? Why did you choose Lithuania specifically?
Kostiantyn: My knowns from the Regional Entrepreneurship Support Fund posted through Facebook a reference to this program. We got interested and decided not to lose the chance. The Fund took upon itself the whole organization of our trip. We spent one month in Kaunas. The training budget provided for covering accommodation and transportation. We covered the cost of meals. Lithuania is the closest post-Soviet European country to us. Therefore, we have quite similar business approaches. We decided that this experience will be most suitable to implement. In addition to it, Lithuania actively develops energy industry from renewable sources.
Why did you decide to use such a program?
Victoriia: In our field in Ukraine there are no companies that are ready to share their experience as we are all competitors. Therefore, we were happy to participate in the program, as we needed practical approaches and changes in our own business. We had a host party consisting of 2 companies. However, we managed to meet more entrepreneurs. We asked many questions and representatives of Lithuanian businesses tried to answer them. Besides, we participated in day-to-day activities of the company: communicated with the customers, solved problems. Kostiantyn even managed to participate in assembling the panels.
Are their significant differences between Ukrainian and Lithuanian entrepreneurs? Which experience did you get during your one-month training abroad?
Kostiantyn: We were very lucky with the partners in Lithuania. All people were welcoming and very open and ready to share their experience. You can say we got personal business coachers. First, these people are owners of businesses, therefore they know all details. Second, they are amazing salespeople. Third, they know all processes and can even install the panels themselves. We allocated part of the time to marketing and strategy, discussing which path of development is better for the company: for instance, we came to a conclusion that it is important to focus and work on quality.
Victoriia: it was interesting to observe which instruments companies use in their operating activities, how they build communication with clients, which equipment they use. A huge advantage is in real practical experience sharing and not theory, as if it is several master classes. It was incredible and inspiring.
Which instruments did you find with your colleagues and which are you using now in Ukraine?
Kostiantyn: It is hard to say that we got some unique instruments that we implemented in our business. We got more, namely understanding how to conduct business. There is a difference between European and Ukrainian business. The business in the West is transparent and competitive, where the main goal is quality and not price dumping. We brought this understanding here and implement this principle in our business.
Can we say that besides experience you received also new business ideas? If so, which exactly?
Victoriia: Besides solar panels we were also interested in the segment of heat pump installation. It is also a technology for obtaining energy from renewable sources. We saw how it worked and marked it for us as the next stage of business development. Currently we do not implement it, but we see a huge potential in this direction. If the cost of energy keeps growing, this segment will in high demand.
The trip gave a push for a new line of business. Are you planning to start importing the panels?
Kostiantyn: We do not import the panels as it requires large financial investment at the first stages – 400-500 thousand dollars. Currently we are using the services of official importers. Naturally, we would like to penetrate this segment, but for doing it we will need a third-party investor. From our side we can ensure a broad distribution network among the panel installation companies.
Was it difficult to find a beneficial and reliable importer?
Kostiantyn: Yes, it was. Sometimes after a certain period the equipment breaks down. The more systems we install, the higher probability of such situation is. There were cases when we replaced the panels due to defects in the course of assembly. Therefore, only after you work this complicated way up, you understand with whom to cooperate and with whom not.
What is the origin of the products that you use the most in your business?
Kostiantyn: The Ukrainian market is almost 100% represented by the panels from China. However, we cooperate both with Ukrainian and European producers. When we were in Lithuania, we met the representatives of the panel manufacturer, therefore it made our communication must easier. We saw in Lithuania how the renewable energy industry could develop under favourable conditions. The Chinese panels are cheap, so the demand is higher. Not each customer is ready to immediately pay by 20-25% more for the European quality. In addition, you can order exclusive goods from European companies, for instance, panels that can replace the roof by creating an airproof cover.
Talking about the panels themselves, how fast is this segment developing?
Kostiantyn: New technologies appear constantly, and equipment changes all the time. The clients become more technologically savvy. The equipment improves, thinner, more flexible, two-sided or more powerful panels appear. The Ukrainian market is a bit behind, that’s why innovations appear at the market with a half-year delay. However, the clients come with a clearer understanding of their wants. Our task is to help them choose the best proposal.
Which difficulties do you face in business? What are the reasons for them?
First of all, people lack knowledge and are very little interested in installing home solar panels. The problem lies in the fact that some information received from the mass media is misleading or insufficient. Second, many companies in the market work in the shadow, therefore clients do not rely on the service and long-term relations with the supplier. The client does not trust the market. The trust must be built, and it can happen only due to proper positioning and service development.
Ukraine needs to borrow the European experience in the regulatory field. Ukrainian regional power companies are not client-oriented, and it creates many problems to those who installs the power stations. Lithuania used the European experience and a ready model and implemented it. Therefore, the licensing process is very transparent and simplified with clear terms and rules of the game. Currently, everything works not so effectively in Ukraine. We hope that implementation of the new electric power market will change this situation for better.
How will the demand on home power stations change, especially allowing for the recent changes in the “green” legislation?
Kostiantyn: 2018 was the year of the highest demand on home energy in Kyiv, Zhytomyr and several other regions. The green tariff started effectively working in Zaporizhzhia only in 2019, therefore the market only starts being active. There is a huge difference between the conditions of development in different regions. As of today we have about 6 clients which formalized the green tariff last year, but the state did not pay them money for 2018 in time, though this year it is performing its obligations.
In my opinion as of the year end there will be a significant growth, as now there are some concerns from the side of the people as to installing solar power stations due to the excess of fake information in the market. There is a misunderstanding of the laws. Currently we work on popularizing solar panels and explaining all peculiarities of the laws. We have even created our own Youtube-channel.
We also see interest from the side of small businesses. Until now we have not been servicing any legal entity. We were focused on individuals: to help usual citizens to build a solar power station at the address of the private house. This year the small business was almost not interested in this direction, as the cost of the electric energy for them was relatively low. However now this direction becomes more promising as after interesting the rate the payback period of a station for small businesses is about 4 years.
What are the differences between conducting business in Ukraine or in Lithuania? Which experience is it worth adopting in Ukraine?
Kostiantyn: We managed to build good relations with business that is working in our field in Lithuania. As young entrepreneurs it gave us understanding of what is important in business already today in order to get dividends for the company in future. It is not an easy way. In the first year such strategy resulted in us having no single contract as we overpriced our services.
In the next years the situation has improved. The stations installed by us generate energy regularly without the voltage decrease. Therefore, most important is that businesses in Lithuania already start being focused on services and warranty as the buffer time between the saturation of the market with products and gradual collapse of cheap and not always quality solutions has passed there. Out Lithuanian colleagues are first and foremost focused on the service. In addition, the Lithuanian model is as follows: the more you invest into your building and make it more autonomous, the lower utility tariff you have. We hope that this model will come to Ukraine.
The story of Kutyk’s family is not the only one. In the last two years 10 entrepreneurs only from Zaporizhzhia Oblast went for business exchange to Europe to bring new culture of business conduct. Those who took a risk and was open for new opportunities show much better results in their own business already now.