Ventilation and air conditioning systems, a lucrative seasonal business

Firms exploiting the need for ventilation and air conditioning systems are boasting turnovers as high as one million euros or even more. Entering this market is not an easy task given the high expenses and the high number of companies established by entrepreneurs who spotted the opportunities for profit.
Liviu Siminciuc, the general manager of Simdan International, set up his own firm in 2005. “Initially, I opted for clothes and footwear retail. I started looking for a space, a stand to carry out my activity, initially at the wholesale centres in Bucharest, but rents were mind-boggling and I only had a capital of 5,000 euros,” recounts Siminciuc.
One evening, he was visited by a friend who came from work and had some plans, schemes and projects for air conditioning-ventilation systems for the firm he worked for. “In the end, my friend asked me if I wanted to start a business with him, me with the firm and the capital and him with the expertise and relations in contracting works,” says Siminciuc.
Five days later, when they were not expecting any reactions yet, the first contract, worth 12,000 euros, came up. Other orders followed and more employees were needed. The entire profit derived in the first 12 months, of some 20,000 euros, was used for the acquisition of necessary equipment or production and they rented a 100 square metre space.
As a result of product and services diversification, the company signed 49 contracts in the first year. In 2006, they managed to create a company website and started to promote the company in various catalogues.
For a firm operating in this field, costs are very high. Moreover, finding skilled personnel is a constant problem for the firm that currently has nine employees and this is why it had to reject important contracts.
In 2006, the firm posted turnover of some 200,000 euros, up 10% against 2005, because of ads and promotion on the Internet. On the medium and long term, Siminciuc says he wants to open a production facility, but he does not have the necessary funds.
Octavian Frusescu, the general manager of Dipet Servcom, started a similar business by selling air conditioners first, in 1996.
The solid experience he built in time, dynamism and a solid renown based on collaborators’ trust were the main factors that helped him build his business. This way, he started an extensive collaboration with foreign partners for which the firm became a direct importer.
Frusescu specified he wanted to develop the fitting and production segments on a market where competition is quite tight, in his opinion.
Initial investments stood at only 100 dollars, used for the acquisition of a fax machine. The entire profit of the first years was directed to investments, which have gradually increased. In 2005, the company’s turnover had exceeded one million euros and income had reached 184,000 euros.

The business in brief
Costs related to materials account for 50%, other expenses, salaries and taxes 40%, with profit standing at 10%
In the first years of activity, the entire derived profit is reinvested
Turnover goes beyond one million euros in the case of firms with some track record