The emergency amid pandemic COVID-19, instituted in early March 2020 in Romania, created numerous financial problems among most of the entrepreneurs. It wasn’t the case for Eugen Saulea, the founder of the personnel leasing company ESSA, who plans to invest EUR 2 million on the Romanian market this year.
Business Review: How did you start this business?
Eugen Saulea: I’ve developed myself, professionally, as a salesman in the consumer goods segment and I’ve been employed in some important multinational corporations for some years. I’ve had the opportunity to travel a lot and meet many people and businesses, smaller and larger as well. My first thought about me becoming an entrepreneur came around 2003, when I embraced the sales consultant role. I was trying to earn some extra money by organizing guidance sessions and training for those who operated in the Modern Trade channel – the major international networks. This distribution channel was just being developed, but it had great growth potential, as you could’ve noticed in the already matured European markets. Officially, I’ve started this business in 2004, together with the foundation of BIP company. Once the foundation was made, I’ve ended my contractual ties with my employer at that time and I’ve fully dedicated myself to identifying the needs and customizing the services of the important suppliers in the consumer goods market. The first two years were tough in all aspects. I had no funds for working capital, no headquarters and no team, but I had great belief in my ideas and the capacity to implement them. My services offer was thought of like a pack of sales-related services. Traditionally speaking, commerce implied that the merchandise is delivered by the producer/distributor and then managed by the location employees in terms of reception, storage, placing in the right area for selling, promoting, etc. Modern commerce is the exact opposite of the traditional one and the responsibility of all those activities mentioned above was our mission and the basic foundation of our current business.
What was the initial investment?
ES: The initial investment was 5.000 euros and it came from family savings. When I’ve decided to change my life from a corporate environment, in which I’ve had a good salary and company car, phone, etc as additional benefits, to an entrepreneurial life and the challenges implied, everybody around me had doubts and told me that it’s the wrong decision.
What were the sources of funding?
ES: When I started this business, there were a few bold companies who took a leap of faith and decided to sign a product on sale point representation partnership. The services implied merchandise handling, sale point refills, monitoring expiration dates, price placement, product advertising through hostesses, etc. The business volume was not very high, but had constant growth and we had the advantage that there were no payment terms that exceeded 7 days. The funding issue appeared a few years later, when the number of managed stores, business volume and the need for resources reached a level that was above our capacity to internally sustain them. There was a turning point in 2006, when we had a situation where we were forced to decide whether to pay our employees’ salaries or to pay the company taxes. Being a relatively new business at that time, based on know-how and not on valuable tangible assets that could grant possible loans in the relationship with the banks, an external funding was difficult to obtain. The factoring type products helped us afterward in not being financially blocked. Accessing these kinds of bank products were possible only after implementing the PO’s (Purchase Orders) with our partners.
Is there any entrepreneur that inspired you? If so, who is he/she and what’s the most valuable lesson you’ve learned from him/her?
ES: I had the opportunity to be part of one of the first generation of employees under the direct coordination of expats that were present in Romania to form local teams of professionals. Those were the kind of managers that had no intention to stop the thrive of the talented team members, as opposed to what happened later in local management structures. We were motivated to learn, to gain experience to achieve the next level in business. I personally had the opportunity to have a great coach, my manager at that time, an imposing man from Turkey, who had great international experience and who managed to implement a clear direction in our professional life. Every member of Mr. Serkan’s team came to be in management positions later on and we all consider him our professional mentor. We’ve learned from him how to be competitive, never give up, never to copy business models, just to inspire from them and transform them through our own approach.
How would you describe the local market in which you provide your services now and what necessary improvements do you think that will make this market better/more attractive?
ES: This year we’re celebrating 16 years since the debut of this business, getting from a maximum of 10 covered stores to over 1900 in 2020 and over 2.6 million hours of implemented services at a national level. These numbers definitely show that we are an important player in the related sales services market and that we add value to our active partnerships. Unfortunately, every crisis comes with changes regarding partners approaching. Once with the devaluation of money, they have to reconsider the financial approach when contracting related sales services. Quality suddenly becomes a secondary criterion of selection and the price becomes the primary one. There’s a major problem regarding this aspect because it’s difficult to change your structure that is used to a different level of professionalism. In recent years, smaller players kept appearing on the market and, because of their lack of experience, they are willing to take risks of any matter and they cause damage to a well-established and developed market. There are partners’ representatives that don’t check the financial statuses and the information regarding the permanent structure of the suppliers and make choices based only on presentations often developed on fictional data.
What were the most important decisions that you had to make that marked your career?
ES: The most important professional decision was taken when I’ve decided to quit being an employee and started being an employer. That moment in 2004 when it all happened, when I quit a life full of tranquillity and great opportunities in sales and decided to start a business, with no experience and resources, was seen by many as a pure act of craziness. Even now, after 16 years, I can still remember my father’s worried face, who advised me to reconsider this change at that time. Cristopher Columbus once said that “you cannot cross the ocean without having the courage to leave the shore”.
I managed to move away from the shore and met success, this is the advice I always give to my employees.
What was the biggest risk that you had to take in this business?
ES: Unfortunately, in Romania, being an entrepreneur is a synonym for risk. One thing that surely needs to be adjusted is the consistency of fiscal laws. Nowadays, the fiscal laws can change from one year to another or even sooner, making it almost impossible to have long-term forecasts and strategies. The way I see it, the authorities need to make feasibility studies when proposing a new fiscal law or modifying an existing one and see if the results are serving the purpose of the law. If feasibility studies show great results, then the implemented new fiscal law should be valid and unchanged for at least 3 years after implementation. This way, as an entrepreneur or investor, you can rely on the numbers calculated during the long-term budgeting processes and not having part of any surprises that may impact our business, fiscally.
What are your greatest achievements?
ES: Modesty aside, I consider myself being one of the pioneers of merchandising services and that I managed to have an important mark on the basics of this discipline on the local market. Although 16 years have passed from the starting of this business, I can still identify blueprints, task books, auction briefs that contain terms, definitions, classifications developed by me and my colleagues that are still part of this business’ journey for such a long time, even from the beginning. There is a lot of respect coming towards me and my company from older purchasers in this market segment and there’s also appreciation regarding our points of view on matters related to this market segment. It’s really comforting and rewarding, as a professional, when important companies from the FMCG industry value our opinions when developing their own marketing and sales strategies.
The outbreak of the Coronavirus has put some massive pressure on many businesses, how was your company affected by this pandemic and how did you manage to surpass the challenges that came across?
ES: The pandemic gave us quite a scare too at the beginning and that’s because we’ve never faced a similar situation before. Business predictability was the main indicator that was affected and we found ourselves in a unique situation that needed direction. Fortunately, innovation, motivation, flexibility and availability helped us to customize the services and surpass this period. For this new year, we’ll apply the things we’ve learned in the past months and we’ll develop, with additional investment, the services that have great potential for success.
Do you have any plans for new investments?
ES: Analysing the actual context, I think 2021 will bring even more economical challenges. We’re already having a history with the pandemic, because of what happened in 2020. There will be business sectors that will not fully function sooner than this year’s second semester. I think that this year’s first semester will be similar to what happened in 2020, in terms of blockages, even if we’re currently in a stage where the population is being vaccinated. Taking these premises into consideration, ESSA has strategically structured 2021 in two main stages. For the first half of this year, we’ll invest in consolidating/growing the services that were most requested during last year’s crisis, such as personnel leasing for cleaning and sanitation services, online picking services, POSM management services and commercial workers services. As longs as there’s a great request for developing a complex service for sales support (orders taking-over, delivery, collection), we’re planning on investing in this direction. The investment will certainly be over 2 million euros, through a partnership with a bank. The need for sales teams outsourcing is frequently requested by our partners from the FMCG segment. They want a flexible service that can be acquired depending on how their sales evolve. This can only be possible through a third-party company, one that has plenty of human resources, similar projects and can delegate employees according to a partner’s schedule.
What’s the most important lesson that you’ve learned in business?
ES: In our services segment, the business is made with people behind it, not with the company itself. During our first years of business, in order to attract more clients and get a bigger piece of the market share, we were used to saying “yes” to almost every challenge and request. Many times, the whole team distorted the truth just to get a bigger piece of the cake. It was a damaging strategy as it did not consolidate the relationships with our partners and there wasn’t a healthy capitalization of our business. In 2006, I managed to fully change our business strategy, focusing on services calibration based on every partner’s budget and strategy and the projects that were unable to be fulfilled at a maximum level of professionalism were terminated. Starting from that point, in 2006, we’ve only accepted contracts that we were able to properly fulfill in terms of high-quality servicing, having proper procedures and paying according to performance. We do not lie and we do not try to make unrealistic promises to our partners and we started earning respect for doing that. In 2020, we were seen as one of the most serious and involved companies from this segment of the market. We’ve changed our form of organization from SRL (Limited Liability Company) to SA (Joint-stock Company) and we offered shares to two of our field colleagues that had remarkable results and managed to stabilize our teams and consolidate the local relationships with our partners.
What are the difficulties that you often come across when managing your business?
ES: Until the pandemic, the most common issues were related to finding the qualified workforce for the needs of every job and motivating the employees with a proper salary for personnel retention within our company’s structures. There was a lot of workforce request on the market but also there were not so many eager to work and this led to a wage discrepancy specific to these kinds of jobs (salaries too high for the job description). Now, I believe that the greatest challenge comes from money devaluation. If there are sales, there is also a request for services. If producers increase their prices at a bigger rate than the minimum wage increases, by keeping a constant value of a shopping cart, this will lead to buying fewer products. Fewer products translate into less hours of services and fewer employees.