Crisis as a recipe for success: How two Ukrainians save customers up to 30% on fuel

Ukraine
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Every entrepreneur has a recipe for how to start and grow a successful business. For Ivan Semenyuk and Andriy Pavlikovsky from Vinnytsia, a city in central Ukraine, this recipe is somewhat unusual: invest money and effort during a major crisis. They started their business, GPS PRO, in 2014 in the midst of political and economic unrest. And in April 2020, during the Covid-19 quarantine, they leased a commercial car under the EU4Business - EBRD Credit Line the EBRD and EU joint initiative. The initiative aimes to help Ukrainian SMEs finance investments, which enable them to seize the opportunities presented by the Deep and Comprehensive Free Trade Agreement (DCFTA).

Bad habits as a niche for business

GPS PRO installs Global Positioning Systems (GPS) in commercial vehicles for companies to control fuel use.

Ivan Semenyuk explains the market conditions for his business: “It is a widespread practice among hired drivers, even a tradition, to drain some fuel from their tanks and sell it on the side. Often you can see this happening right on the side of the road: a truck is parked on the shoulder with a hand-made sign next to it indicating the type of fuel and price on offer. With the help of the GPS, owners can track fuel usage and respond in a timely manner. Oftentimes, it can mean savings of up to 30%.”

Since 2014, GPS PRO has been run by its two founders and a series of freelance specialists. Their first customers were the 15 vehicles of logistics companies. Thanks to their central location, from which someone can easily get to other areas and cities within 1-3 hours, the business began to grow rapidly.

Soon we faced the classic problem of a growing business: there weren’t enough of us for all our customers’ needs,” admits Ivan. “We were doing everything, from selling services to new customers to servicing vehicles with equipment installed by us.”

When one of their clients was unable, not for the first time, to connect his equipment to the GPS system in time, he said frankly: “Boys, either you grow with us, or we don’t work with you.”

For us, it was a clear signal that we needed to expand our own fleet to keep up,” Ivan recalls.

Hard choices for financing in the midst of a crisis

It was April 2020. Ukraine was in total lockdown. Logistics companies parked their fleets as state borders were closed. Anxiety about the future vibrated in every social net and every cell phone call. But Ivan and Andriy again decided to take a risk, like they did back in 2014, to acquire a vehicle by borrowing or leasing.

The first option was a state programme designed specifically to support SMEs called “Affordable loans at 5-7-9%.” The conditions were attractive, but the business partners were short of time. Despite the accelerated 60 days to approve a loan, they looked for other options. The next option was to buy a new car from a Fiat showroom under a leasing agreement.

"The manager offered us a leasing programme from one of the banks, but she quickly understood that it was too expensive for us,” Ivan says. “She then told us about the EU4Business - EBRD Credit Line the EBRD and EU joint initiative and that OTP Leasing was one of the partner banks of this initiative in Ukraine. Under this programme, we’ve received a grant for 10% of the car cost, or approximately €1,670, on a 2-year leasing term. These conditions were a lifesaver.”

What's more, due to the difference in the cost of the car, GPS PRO now has another important tool: a calibration station. “This station allows you to automatically set accurate fuel-level indicators in a vehicle's tank,” Ivan explains. “Previously, this work was carried out by one of us, wasting 3-4 hours of work time. Now it’s done automatically within an hour, and the person can do something more important in the meantime.”

This is a good example of how financial support under the EU4Business - EBRD Credit Line the EBRD and EU joint initiative works. It’s designed to support Ukraine’s SMEs and entrepreneurs in aligning their businesses with the EU Directives. By investing in upgrades of their production processes and services, entrepreneurs like Ivan and Andriy can explore new market opportunities. As a result, SMEs increase their product/service quality, improve their competitive positioning and enhance their environmental responsibility, as new machinery always consumes less energy and is lower in carbon emissions. 

Working with the big league

Back in 2016, Ivan and Andriy started working with what was then a small company called Avtostrada, with a fleet of 20 vehicles. Today, Avtostrada is a contractor under the “Major Construction” state road-building program and GPS PRO is servicing their 250 units of road machinery.

“We intend to expand our cooperation with Avtostrada, because this work is already gaining national importance thanks to the potential fuel savings,” says Ivan with some pride. “We would gladly get another car from OTP Leasing under the EU4Business - EBRD Credit Line the EBRD and EU joint initiative, because we see the economic value.”