An interview with the owner of Kharpcheloproduct Ltd., Mr. Denis Soldatov, a company incubated at the Kharkov Techologies Business Incubator in Ukraine. The company specialized in honey and beeswax products, as well as the production of beekeeping inventory. Mr. Soldatov was interviewed by Inna Gagauz, Director of Kharkov Technoogies.
An aircraft technologies engineer by education and innovation by profession, Mr. Soldatov learned about the potential of honey production in the Eastern European region, and decided to enter the market. By 2004, he employed four people and focused on the production and sales of honey products in the Ukrainian market. Kharkov Technologies, supported by the infoDev incubator initiative, motivated Mr. Soldatov to use the Internet not only for sales but also for reaching out to new partners and to new technologies. The program Kharkov Technologies provided included training, and financial and technical support, which was also provided online through Kharkov’s distance learning and virtual incubation tool.
In 2007, Mr. Soldatov did not only increase his sales figures in the key market segment of honey and bee-keeping products four-fold, but he was also able to reach out to new clients and partners in Europe and the Middle East. Currently, Mr. Soldatov provides 20 permanent and 40 seasonal jobs. In addition, the international skills enabled the company to successfully extend the product portfolio to instruments and special clothes for honey production. Mr. Soldatov set up a regional cluster uniting 10 regional centers each of them joins approximately 100 small honey producers, aiming to increase their production, quality and marketing capabilities. He opened the store where honey and bee-keeping products are sold.
Is this the first company that you have started, and what drove you towards it? Kharpcheloproduct is the first company where I have been working as a Director and where I was invited by the owner of the company
"Having collaborated with other fellow entrepreneurs who started a business without such a [business incubation] support network, we can see that most of them lacked the necessary knowledge, information and experience - this held them back and decreased their competitive abilities. Now, understanding the needs of start-ups, we are ready to share our experience and knowledge..."
Mr. Denis Soldatov, Owner, Kharpchelproduct Ltd.
How did you finance your start-up operations and how long did it take for the company to become self-sustainable?
The company started its operations with a seed investment of 5000 USD and it took 5 years to become more or less sustainable.
What are your major products and services and how are they unique? What is your competition?
The main activities have been wax reprocessing and production of refined wax. Technology of refining and sterilization of wax have been developing and improving during the past 7 years and has been kept secret. The competition at this market segment is quite high: in Kharkov alone there are 2 more companies and over 40 in Ukraine in total.
How did you first launch the product?
In 2004, after receiving stable quality results, we carried out an advertising campaign throuugh mass media, Internet, at exhibitions and due to this have occupied about 10% of the bee-keeping products market. This promotion campaign was carried out with the assistance and under the supervision of the Technology Business Incubator Kharkov Technologies.
How do you measure the success of the company?
Sales have increased 40-fold since 2005 and reached 400,000 USD in 2007. The company’s own shop has also been opened. Investments in the company during its development phase total at 60,000 USD.
Who are your clients and how many do you have? How are you focusing on expanding your user community?
Our clients are both large firms and private bee-keepers. Mainly our clients are from Eastern Ukraine but there are also customers from other regions and from NIS countries. At present we are developing a dealers’ network all over Ukraine and by the end of 2008 we plan to cover 7 regions of Eastern Ukraine.
Are you planning to patent your product and do you see any obstacles in doing so?
We are planning to patent the method of wax refining and industrial sample of wax filter. It is quite a time- and money- consuming procedure.
What was the biggest challenge in starting an innovative business in your country and how did you overcome that?
Bee-keeping is a conservative business and innovations are not always welcomed. To overcome these challenges we received qualified support from TBI Kharkov Technologies (creation and support of Internet site for bee-keepers and e-shop, trainings and workshops on ICT use in bee-keeping business, assistance in participation in exhibitions, search of business partners, attraction international experts). Only due to such comprehensive support were we able to educate our client bee-keepers, and to change their mentality towards innovative approaches. We introduced a new uniform for bee-keepers and new containers for honey, and held several educational workshops on introduction of new technologies.
How have you benefited from business incubation?
Everyday business support includes things like trainings, informational support, web-site development, assistance in getting credit, and technical support, such as equipment for organizing workshops, conferences, and fairs.
Through overall support from Kharkov Technologies and the infoDev program, we learned how to apply the Internet not only for sales but also for reaching out to new partners and to new technologies on worldwide scale. In addition, the international skills we gained enabled us to successfully extend the product portfolio to beekeeping inventory and special clothes for honey production, which we sell today not only in the Ukraine but worldwide.
What do you see as the role of ICTs in supporting the start-up of your business?
It is very important for a successful and profitable business to apply ICTs in daily operations from the very beginning. For example, we created an Internet site with an e-shop aimed at increasing marketing opportunities and better product promotion. It is also crucial for start-ups to gain the necessary knowledge about how to use ICTs in daily life, such as for the improvement of maketing skills and quality management issues.
We were very lucky to have such opportunities at Kharkov Technologies, which allowed us to become competitive in the local market and even to enter and compete successfully across the national market. Receiving high quality, comprehensive support is a key success factor for beginners. Having collaborated with other fellow entrepreneurs who started a business without such a support network, we can see that most of them lacked the necessary knowledge, information and experience - this held them back and decreased their competitive abilities. Now, understanding the needs of start-ups, we are ready to share our experience and knowledge with the aim to mutually benefit from setting new goals and solving new tasks by joining efforts with other businesses more successfully.
How do you plan to internationalize your product and if so, how?
We plan to patent our methods of wax refining, to certify production and enter international markets, and to develop and produce other innovative bee-keepers’ products.
Do you feel that you had the necessary advisory and support network when you started your company?
We had all necessary advisory, technical and financial support we needed from the very beginning from the TBI Kharkov Technologies
What is your message to funders/supporters and what is your message to the users of your product?
Our message to funders is that we need financing for building storage, creating the sales network, building the plant for honey and bee-keepers’ equipment export, abd organizing a regional laboratory on certification, including ISO-certification. There is growing market demand in certified honey and bee-keeping products of high quality, in new innovative technologies and equipment in this sector.
Our message to users is that we use only natural pollution-free products for our manufacturing, control quality of honey and other bee-keeping products, take stock of all the bee-keepers of the region, control chemical parameters of land, air, water surrounding client apiaries and therefore are responsible for and guarantee high quality of our products. We are always trying to create new innovative products that would satisfy growing and developing market needs. We use only environment-friendly technologies.
For more information about this company, please visit the Kharpcheloproduct Ltd. website.
For more information about the Kharkov Technologies Business Incubation, please visit their profile in the Global Network Directory.