Eurasia Foundation: Small Business Loan Program

Click Here
to read other
Eurasia Foundation
Profiles

A Eurasia Foundation Small Business Loan Profile

The ASK Advertising Company:

How a Small Design Firm Took Root in Armenia
with the Help of an Opportune Loan.

Yerevan, Armenia

Story by Armenuhie Petrosyan,
Izmirlian-Eurasia Foundation Small Business Loan Program

Few people are lucky enough to fall into their dream jobs. Hayk Karapetyan happens to be one of them, and Armenia is all the happier for it. Following the design instincts that he honed over the past twenty years as a prize-winning architect, Hayk and his company have added stylish touches to restaurants and other establishments across the country. Now, following a loan from the Izmirlian-Eurasia Foundation Small Business Loan Program (SBLP), Hayk and his partners know that their business will be serving the community for years to come.

Hayk began his career soon after graduating from college, working in several offices in Armenia as an architect and construction manager of private homes, large apartment complexes, and government buildings. After a few years of working for other people, Hayk had gathered substantial experience and knowledge, so he decided to put his skills to use in following his own ambitions. In 1988, he and three friends founded ASK, a private company offering a range of design services from architecture for whole buildings to neon signs for front doors.

Hiring its own small construction crew, the company was able to generate an income fulfilling both small and large orders for private and public clients. ASK soon grew, establishing branch offices in the cities of Gumri and Vanadzor—Armenia’s high-risk earthquake zone. In addition, the ASK construction crews served clients in areas beyond Armenia proper, including Karabagh, Russia, and Slovakia, to design and build apartments, hotels, and discos.

While ASK’s construction services made the company profitable, its owners were eager to diversify and offer their clients other services. The first opportunity to venture into a new area came when a grocery store ordered a custom-made neon sign for its front door. Once ASK successfully filled that first order, ASK knew that it could profitably offer both interior and exterior design services using neon lighting and signs, both of which were still novelties in Armenia in the mid-1990s. As the number of Yerevan’s new restaurants, cafes, and bars began to skyrocket, each competed against the others for the most attractive appearance. Suddenly, Hayk and his colleagues were overwhelmed with opportunities to create unusual yet stylish designs as each new customer arrived with bigger and better ideas.

By 1999, however, ASK found it increasingly difficult to meet the onslaught of orders, caught as it was in a vicious cycle of not being able to buy enough supplies to meet demand for its services. Hayk would not consider losing a single customer, nor would he withdraw funds from ASK’s construction projects. Instead, he opted to borrow funds—a difficult proposition in the Armenia’s economy. Fortunately, he was able to find a program that would extend a long-term loan at a competitive interest rate, and in September 1999 that program, the Izmirlian-Eurasia Foundation Small Business Loan Program (SBLP), disbursed a loan of $15,000 to ASK at an annual interest rate of eighteen percent. Hayk used the loan proceeds to import a large batch of neon and argon gas tubes and other supplies from the United Arab Emirates. The new materials made it possible for ASK to meet the deadlines for all of its pending orders. In the year following the loan, word spread in the business community, and ASK soon became known for its high-quality services and low prices, ultimately doubling its customer base. The results were so positive that in addition to repaying its loan, the company was able to give a raise to each of its ninety permanent employees.

Both the SBLP and Hayk knew that they were not running a risk as long as the company tried its best to succeed. "I’m glad that we have to compete in the market, and the competition is growing more and more intense," explains Hayk. "The competition makes us work harder, which in turn makes our customers happier with the quality of our services and eager to place more orders. I’m delighted if a customer chooses us for our lower prices, but I’m even more pleased when they choose us for our quality."

In April 2001 ASK repaid its loan in full and received another loan of $40,000 from the SBLP shortly afterwards. "Any loan is a great risk for the company, and for the creditor as well, but for us it really is a catalyst," explains Hayk. ASK has used a part of the second loan to buy the premises that it was previously renting. It used the remaining funds to buy more supplies and fill more neon sign orders.

ASK is now part of the ASK Associated Group of Companies. Each company in the group specializes in its own area, including apartment complex design and construction (Arkhinova, Ltd.), import and export of sign materials (See Signs, LLC), purchase and sales of sign materials (ASK Signs, LLC), and sign making and design (ASK Neon, LLC-Russia).

ASK has always been rewarded for its good ideas, which have earned it commendations from local government and private organizations, including Coca-Cola Bottlers Armenia, Armenian Airlines, the City of Yerevan, and the Social Investment Fund.

2001