Growing a business requires tenacity and the ability to adapt
Dialogues with Anca Vlad, founder of the Fildas Group
Source: Revista Piata Financiara, special issue “Romania dupa 25 de ani”
We have the pleasure of talking with one of the most powerful business women from Romania, Anca Vlad, founder of the Fildas-Catena Group and one of the few women from Eastern Europe included in the organization Leading Women Entrepreneurs of the World. Extremely pleasant, with a positive attitude and the posture of a person deeply involved in what is her career and the family life, she reveals to us what these last 25 years, that marked Romania, meant to her. She started to build her career ever since graduating from college, working as a export department leader for the company Silvarom. In 1987 she had the opportunity to work at the Chamber of commerce of Romania, as the national representative for SmithKline Beecham Pharmaceuticals, from Great Britain. After the Revolution, she decided to leave the state sector and, sensing the opportunity, she started the first consultancy company from Romania. In 1991 she started Fildas, with 7 employees and, later, in 199, the Catena network. Catena and Fildas are now a yearly business of 350 million EUR and with more than 3200 employees. The road to here was not easy at all.
Special event during the days of the Revolution
For Anca Vlad, the revolution of December 1989 is closely connected to a personal event: On December 25 her marriage was scheduled. She still recalls how, in those troubled days, in the week prior to the fall of the dictator, she was running at the seamstress, to try on her wedding dress. “The seamstress was gone. I was seeing people buying bread, because during 16-22 December it was not clear what was happening, but people were buying bread and canned goods. There was something in the air”, tells Anca Vlad. On December 22 she was scheduled to take the exam for her driver license, but this, of course, was not held. The wedding also did not take place, and not just because a large part of the guests no longer wanted to come, but because the church, and restaurant were closed those days. “We still managed to get to the Family Registry on December 25th. I remember that we simply walked on bullets. I could not find any flowers, just a clump of mistletoe – this is how the new era started for me”. But the mistletoe brought good luck.
She remembers the huge joy she felt when the dictatorship of Nicolae Ceausescu was over. She admits that, from a material perspective, she was not doing that bad, but she felt something was missing: “I was 33 years old, I had a good income, entrepreneurial spirit, I was teaching French and English, I was translating. From a material perspective, I had no problems, but from the perspective of the freedom of speech and the freedom to travel, we were just caged birds. The communist evil was gone! Our life changed completely then, but so did our expectations. Our hopes were huge!”.
She recalls the first elections and it seemed normal to get completely away from the communism. “That felt like our only hope. I was looking at the people waiting in line to vote and I was thinking they must know what to vote for. But now I realize I was optimistic. Great changes can not come overnight, a transitional period was needed”. It just seems like Romania never left the transition. “Maybe this is our life, as Romanians, in eternal transition, with a very, very troubled history. We all dreamt and we were promised that we will join the world, Europe. This was not fully achieved. But it is not just our fault, it is also the discrimination that plagues our continent”, says Anca Vlad.
She waited 6 months for the first client
The start of the entrepreneurial career is connected, strangely, with the wedding. She raised some money for it, but, since it never took place, she had the money to start the first business and buy the furniture for her first registered office of her first company: A library, several fancy desks, a copier, a fax. The company had the registration number 800, being the first marketing and consulting company from Romania. “I studied English in high school and was fluent in the language, I had ties to the drugs domain, I always worked at the drug festivals from Romania as a translator, organizer, and it seemed logical to pursue this. My mother in law said that I might have been the first unemployed person in Romania.” And this is because the start was rough: 6 months went by before I found my first client and first contract. But the contract was for 3000 British pounds per month, and this gave her hope.
“Then the second client came, then a third, and pretty soon I had contracts for 10,000 pounds per month. And in the second year of activity I started the trading part, because the market was asking for this, and the sums from commissions were interesting, enough to be able to develop”. She recalls that back then, there was no VAT, only a tax of 2% for the circulation of goods. She says a company could operate without having to pay huge sums in advance to the state, but the taxes were very high: At one points they reached a total of 55%.
How is the life of an entrepreneur? “Every day has its potential, you will meet people, you will read something interesting, you will get an idea to work with, so life can be beautiful, because you can create, like an artist. Obviously, there are multiple difficulties, but even an artist has trouble getting his art understood and appreciated.
There was a steady increase, in 25 years: From zero to a million, to two million, to five, to seven, to seventeen, to twenty five millions. It is the woman style of running a business, brick by brick. The growth means tenacity and ability to adapt, because we, the Romanian entrepreneurs, faced so many governments, so many types of laws, so many waves… and I had to keep the boat afloat and on the right heading. And my boat was growing, from 7 people, to 50, to 100, and now to more than 3000 employees. We have a lot of clients, a lot of providers for goods and services that depend on us and provide for us. But I can say that my entrepreneurial dream has come through.
The main problem was the financing
When she started her business Romania enjoyed a huge sympathy. But this did not last long. “After the Revolution people appreciated our bravery, the fact that we managed to overthrow a dictatorship. But then so things happened that first created a misunderstanding and then contempt for Romania, and this because we could not solve some social issues. The lack of sympathy led to a major reserve when it came to granting loans to our companies, up until 2002”, says the founder of the Fildas group. 12 years passed, and during this time local companies could not develop, because the banks were only giving loans to state companies and foreign companies. “The main problem of Romanian entrepreneurs was the lack of financing, especially since the state did not pay his debts in time. With regard to Fildas, I managed to transmit to the partners I started this business with, a strong sense of trust. They liked this linearity of the group, they considered we have a solid business and they gave us goods on loan”.
The loans really took off in 2007, anticipating the crisis. “We received some new loan proposals and we accepted because we needed them. The crisis was brutal, we faced many insolvencies from our partners, many from invoices not being paid by the state. It was hard for us too. We had major problems with the bank loans and the devaluation of the leu. And the fact that the state delayed payment to the providers for almost a year and did not reevaluate the exchange rate, while we worked with a fixed price for drugs, made us lose a lot. For 2-3 years we struggled”, admits Anca Vlad. In that unfavorable economical context, Fildas was at a standstill. Catena, did not feel the crisis the same way, because it was a new business, and new businesses gained during that crisis time, says Anca Vlad.
We should show ourselves in Europe as what we are: A proud nation, with talented people; we have a history, we have intellectual abilities. We can not accept to be hit, and I for example, to lose points at the grading companies by 30%, for the same numbers, same business, just because I am Romanian. Romania is a country of smart people, a country of art and beauty, a country with a history. Romania is a country with extraordinary perspectives.
Lessons of the crisis
The crisis taught Anca Vlad to stop planning for the long term. The Group budgets are now for a year, the business plans for six months, and the bank contracts, for three years, especially given that the banks no longer want longer periods. With regard to the business plan, it is focused on development. “We are the strongest pharmacy chain in Romania, and for the distribution we have a honorable third place. In this context, there is a need for a generation exchange, for the company to move forward, to maintain its position when facing the multitude of quakes in the economy and in a strong concurrency environment. We constantly renew our personnel, so we always have young managers, so that we have someone to carry on our dream. We were part of a generation, and now we a forming a new generation, and we get good results. The generation exchange is already ensured”, says the founder of the Fildas group.
The young graduates are not focused on entrepreneurship
Sadly, says Anca Vlad, the young graduates are not focused on entrepreneurship. And this is not their fault, it is the fault of the Romanian education system. For example, the British education system, prepares kids to become entrepreneurs at 18 years of age, and starting from high school economy and business are two classes that receive a good focus. “I am surprised that the Romanian education system did not evolve in this direction and that today, as a high school graduate, you learn nothing for this. Sometimes, what you have to do, does not require a college degree.” She thinks that the school does not prepare these youths for the challenges of working in a real company. “It is not their fault for not knowing, it is the fault of their teachers. They have no practical skills, because there are no practical classes, but they learn fast and are willing to learn. They have the whole future ahead of them, it would be a shame to become just a source of labor”, says Anca Vlad.
The laws should be rewritten
She thinks that the laws are cumbersome, thick and unpredictable, and should be rewritten, especially the economy laws. “The laws are impossible to read, even if they should have a familiar language, because they are made for us, the citizens, to help us, not to confuse us. I have a law “translator”, because in each law there are references to seven other prior laws. If the point is not to breach them, they should be very clear. The state should do something to gain our trust.”
The economical potential or Romania: IT and agriculture
She thinks there are two domains in which Romania has a huge potential: IT and agriculture. “God gave us the best options to have a performing agriculture, but this requires industrialization. On the other side, we should develop the IT abilities, especially for the workforce. The young talents, emerging from the specialty schools should be encouraged, because around them you can form teams that will truly bring value to the Romanian society”.
A third domain with potential for Romania is, according to the founder of Fildas, the creativity. “We are capable of innovation, but we must encourage those with the talent and creative intelligence. But this requires a lot of attention with regard to how the government spends the funds from taxes and the European funds. For example, the French assigned 25 of the GDP for research and still they are dissatisfied. My opinion is, to check what each group of budget expenses produces, and if it does not provide something useful for the society, remove it”, thinks Anca Vlad.
Computerization for the state vs the computerization for the private sector
With regard to computerization, Anca Vlad thinks the state handles huge sums for a project which, in the private sector, would be made with much less. “I confess that I have some fears related to the launch of the 2020 project – I heard for example, that we need 5 billion EUR for the computerization of the country. These numbers are ridiculous, but I heard them uttered. The computerization should be developed in stages, because technologies change a lot. We need a project that will be achieved in phases and will look for the optimum version. We have some experience: We have 2.5 million loyal clients, we issue 6 million prescriptions in the whole country and 18 million receipts, and we know exactly when and what our clients purchased and we do it with IT expenses of under two million EUR per year”.
Anca Vlad has a pertinent opinion with regard to the cloud technology, that the state wants to implement “This cloud is not just a word, it is a pure marketing construction, regarding the storage of data, which is not made in the clouds, but here, on earth, in someone’s server. It is a European problem where the data are stored”. She thinks the government should have its own servers, on which to store the information. “We have our servers and we can not take on the cloud our information regarding the clients and the drugs.”
With regard to the health cards, Anca Vlad thinks the problems many have are not regarding their usefulness, as some try to project, but the fact that these cards greatly reduce the possibility for corruption in the health system. “Everybody has cards and if they can have cards with money, they can have cards with information about their health. The problem is different: this card greatly reduces the possibility for corruption. The control and computerization make a huge difference.”
The entrepreneurs would be helpful for the government
Anca Vlad thinks the government could learn a lot from the entrepreneurs from the private sector, if they would allow a dialogue, and she does not understand why, in these last 25 years, few governments and authorities really listened. “We have several platforms for internal communication, one is called the Road to excellence, where pharmacists can write. The write what they notice and, even if they remain anonymous, the information still reaches the managers. Some of the proposals can be implemented some can not, but there is a communication, someone reads these proposals. I whish that here in Romania we would have a real dialogue between the business owners and the authorities. We know what the market prices are for projects that the state wants to implement. They should just ask and listen to what we have to say.”
The culture of team work
She considers that the team work is the biggest problem in Romania today, at all levels, including the private sector. “This is a real problem, and it even happens in our company. But we have a course to solve the lack of team work, and I participated. The result was shocking. We had some contests, first individually, then by teams. The hierarchy changed: Those that had the best individual results, when working in a team, did not get the team to have better results. Those that were at the middle of the chart had the winning team. So it is not the personal qualities that decide but the team quality and the teamwork. Since then we only work as a team.”
In the personal field she has several pursuits, aside from the business. One of her pursuits is to support the Romanian art. “I think I will focus more and more on supporting women entrepreneurship. Now I have a child that must finish school, but later it will be easier to travel. I attended various conferences and I observed it is harder to travel in the country than abroad. It is harder to get to Iasi than to London, but I plan to overcome these challenges for a good cause, says Anca Vlad.