How My Business Survived in Crisis

What’s up guys? My name is Dmitriy Garbowski and today I will share my personal story of how my business survived in crisis.

This is not the story from the recent Corona-virus crisis, this story is from 2014, and it’s very illustrative! Back then I was living in Kiev, Ukraine and I was running a flooring company together with my business partner. We had a store where we used to sell different kinds of flooring – mostly engineered wood and laminate flooring.

So what was the crisis about?

As you might remember 2014 was the year when there was a revolution in Ukraine. The same year Russia annexed Crimea, which is a part of Ukraine. It was a huge crisis in our country and it hit the economy very much. The currency exchange rate has changed dramatically! Previously it was 8 hryvnias for 1 dollar, then after 2 weeks it was 25 hryvnias for 1 dollar.

This situation was especially critical for those companies which were selling imported goods. The price for those products increased 3 times because of the currency exchange rates. In addition to that the Government implemented 5% additional taxes for all imported goods. These changes were very rapid and many customers stopped buying imported goods, because they couldn’t afford them anymore. Many people were getting their salaries in Ukrainian local currency, and their salaries didn’t change, but the prices increased 3 times. A lot of companies, including some of our partners, whose main business was the importing, had to close.

• Side note: That’s another good illustration of why you should not keep all eggs in the same basket. It’s always good to have a diversity and to be flexible.

What happened to our company in crisis?

In our store we were mostly selling imported products too – engineered wood, solid wood and laminate flooring. Suddenly we realised that the sales are dropping like hell and soon we will not be able to even pay for our office. We had to do something and do it quickly.

• By the way, if you will have any questions – please let me know in the comments and I will do my best to answer.

Which solution did we find to survive our business?

We started to look at the different options. How can our business survive in this crisis? We were speaking to our partners, to our suppliers and to our customers. After some calculations we found out that the local Ukrainian solid wood factories didn’t increase their prices so much, because they were not so dependent on the currency exchange rates. We realised that before the crisis people were mostly buying engineered wood. It was cheaper than the local Ukrainian solid wood. Solid wood was always more expensive, kind of “elite” flooring.

Our calculations shown that now, in times of crisis the local solid wood became cheaper and more affordable. We calculated all the expenses for engineered wood installed, and we compared it to all expenses for a local solid wood installed, including all materials and works, it came significantly cheaper. But the customers and many partners didn’t know about it yet, we had to tell them.

What did we do? How my business survived in crisis.

We realised that we found a great solution for our customers. If they cannot buy the engineered wood – we can propose them the better flooring, which will last much longer, but it is local and therefore more affordable.

• Side note:, if there is a crisis, customers always start looking for more affordable, cheaper solutions. If you want to survive, you need to use that.

We also made some adjustments in our store – we removed imported flooring which was not very popular, and we put the local solid wood in the best places of our store, so the customers see it immediately, and it looks very attractive to them.

What was the result?

As a result, our sales actually increased during the crisis. We switched from imported products to local products which were not impacted by the currency exchange rates and additional taxes. We also got a good reputation among our customers and partners, because we provided a good solution for them, and they saw that we know what we are doing. Our business not only survived in crisis, but started to grow!

After a few months we decided to start our own local solid wood production. We knew everything about the local wood, we knew the production technology, and we knew it will significantly increase our margin. Of course, it required some investments from our side, and we didn’t have the money to invest. But again, we found the way to start our own solid wood production WITHOUT investing our money. Do you want to know how? You can read this story in my other post: How To Start a Business With No Money. How I Started my Company without Investing my own Cash.

I hope it was helpful! Have a great day and see you soon!