Toncho Petrov Pavlov

Toncho has been hard at work this summer building out his selection of goods across product categories. After modestly increasing his store space, he

Apologies for the previous journal; there was a bug that prevented the entire entry from being displayed. Here is the full journal:

Toncho has been hard at work this summer building out his selection of goods across product categories. After modestly increasing his store space, he built out his inventory, in particular of DVD players and car audio systems. While he continues to face significant pricing pressure from the large chain electronics retailers opening up in the region, Toncho is focused on leveraging his service capabilities into a competitive advantage. While the same products sold at the chain and Toncho’s store carry the same warranty, Toncho can guarantee a higher level of service should the item need repair, as he can provide most repairs at his shop. He makes a point of keeping in stock the parts that tend to break on his biggest sellers (in particular, the DVD door on a particular Chinese-made model) so that he can provide quick turnaround on repairs. Rather than have to return a product to the chain, deal with staff who do not know the products as intimately as Toncho and have to wait for the product item to be sent off for repairs and back, Toncho can offer most repairs in a day. It’s a strategy that seems to be working on certain levels; Toncho is definitely able to maintain a large percentage of existing customers, but he has a tougher time pulling in new customers.

Toncho is having a tough time growing as fast as his market opportunity.

Toncho just made a significant payment on his loan, which you’ll see posted within the next few days on this site. Financially, he is in decent shape. However, his ability to expand has been limited. His town has seen two “big box” electronics retailers open within the last year, plus a German Wal-Mart style retailer that offers some electronics. While his business remains viable and he can retain many of his legacy customers, he’s having a tough time competing on price and selection with his newfound competition.

One of the toughest things for Bulgarian entrepreneurs to manage (as it is for all) is CHANGE. The difference here is that the pace of change has been increasing more rapidly than most places. (To put an awkward sentence slightly clearer, the derivative of the rate of change is greater here than most places). For generations, things have changed very little in the Balkans. As Bulgaria entered the EU and outside capital has come rushing in, many smaller firms have faced surprising competition in a shocking short period of time. We’re working with Toncho to learn how to adapt to this situation, but it’s going to be an uphill battle for him over the long-term.