Lynka Promotional Solutions, based in Krakow, is celebrating its 20th anniversary this year. In 1992, just two years after the fall of communism in Poland, American John Lynch decided to found a T-shirt company in Krakow – a city, which, like others in Poland, lacked even the basic infrastructure. A few years later the Lynka president launched the Krakow branch of the American Chamber of Commerce, which he has helped run ever since. Now, 20 years later, Poland is booming, AmCham is thriving, and Lynka is the largest apparel supplier in Central Europe. The Krakow Post asked John Lynch to share his thoughts on the challenges of starting a business in Poland, the company’s critical milestones, and his predictions for the struggling European economy.
Krakow Post: Please give us some background on Lynka.
John Lynch: Lynka, based in Poland, was one of the first companies in Central and Eastern Europe to offer promotional clothing, corporate apparel and work wear to the business community, and currently services clients in 22 European Union countries. We started with T-shirts but expanded to polos, fleeces, shirts, jackets, caps and bags. Thanks to our model – and 20 years of hard work – we are now the largest apparel supplier in our region.
KP: Tell us about your business and areas of expertise?
JL: Since the beginning, Lynka has specialised in promotional clothing and accessories, with a full-service model that includes award-winning screen printing, embroidery and other forms of embellishment. We are widely regarded as one of the leading screen printers in Europe, and we’ve won 40 awards for the quality of our printing and embroidery – more than any other European company. Just recently, we won the EPPI 2012 Promotional Gift Award for the quality print we did for a Finnish client. We specialise in very high quality, complicated decoration, including special effects, for advertising and sportswear clients. While the vast majority of our business is with promotional distributors, we are also the only NIKE official apparel vendor in our region – thanks to rigorous compliance standards regarding environment, safety, quality control and employees.
KP: What was it like founding a company in Poland after the fall of communism?
JL: It was an extremely exciting time, with things changing at lightning speed. It was also extremely challenging. The problems most entrepreneurs face include lack of capital, no established client base, tough competition, and all the usual headaches of any startup. In our case, you had to add lack of infrastructure, an undeveloped legal system, rampant corruption, and no trained employees – all in a language that we barely knew. On the other hand, our business education and experience in the U.S. helped us to be extremely disciplined and organised from the start. We had a clear business plan, financial projections, written SOPs and even a little org chart. We also had a big vision of where we wanted to go. When we launched Lynka, I was 30 years old. The average age in the company was 23; basically, the employees were all inexperienced. That created unique dynamics, but it was great fun.
KP: What are the significant steps you took to build your company?
JL: I think there were three milestones. First was our decision to become a really top-class decorator, in 1996. We often attended U.S. trade shows, where we met some of the leading firms, including Mirror Image of Rhode Island, and began a technology sharing agreement whereby Mirror Image taught us all they knew about printing. The result was that, in 1997, Lynka became the first non-American company to win the SGIA Golden Image award, leading to a PR bonanza, and accelerated growth. Second was taking on a private equity investor in 1999. That provided the fuel we needed to grow from a smallish company to the company we are today. This funded our modern facility, improved our IT systems, grew our inventory, and added new product categories. Within five years we almost tripled the size of the business. Third was our strategy to expand across Europe. In 2003, Lynka was 97% domestic sales within Poland and only 3% export. In 2004, Poland joined the EU, offering an opportunity to export to new markets. We attended a major industry show in Dusseldorf in 2005, and printed live on a 16-colour automatic screen print machine – which won us hundreds of new clients. In 2011, export accounted for 50% of our total sales, growing at 45% annually for five years running. Export has been the engine of growth for Lynka.
KP: In light of problems across Europe, how are Poland and your company faring?
JL: Extremely well, knock on wood! When the global crisis hit in 2009, Poland was the only one of 27 EU countries that didn’t experience a recession. In the 21 years I have been living here, Poland has never experienced an economic contraction, although at times things slowed to a crawl. However, since export is now more than half of our sales, the rest of Europe counts more than Poland alone, so we carefully watch what’s going on. I think 2012 is a tough year for many companies, but Lynka will emerge stronger for sure.
KP: What are your biggest business challenges?
JL: Our biggest internal challenge is making sure that our operations and systems keep up with our growth. With average order size being rather small, high growth implies a larger number of small orders. The operations challenges are the most painful, and most important to overcome. Our biggest external challenge is low-end price competition, particularly in Poland, but also elsewhere in the EU. Lynka promises the best solution, but not always the cheapest. We need to carefully communicate our value proposition, so that clients understand that Lynka is really the best deal, considering price, quality, product assortment, speed and ease of doing business.
KP: What are your predictions for the coming year for the industry as well as the European economy?
JL: I don’t think anyone knows for sure. The mood was quite pessimistic earlier this year, although today it’s a little more hopeful. Either way, promotional companies that have a large exposure in these markets are certainly having a hard time. I heard reports that some companies are 30% to 50% down in Spain and Greece, for instance. However, German-speaking countries, Benelux and Scandinavia are holding up quite well, and I think the UK, although not booming, is doing fine. So net-net, many European promotional companies will likely shrink this year, but a few well-positioned ones may even experience 5% to 10% growth.
KP: What are your plans for Lynka for the future?
JL: Our Big Hairy Audacious Goal is to become one of the top five apparel suppliers in Europe within five years. That means continued growth, via an increased European presence, more sales reps, more trade shows and entering new markets, which we will do carefully and profitably. We want to be the favourite apparel supplier of European and Polish companies and agencies – large and small, and are close to launching a new e-commerce platform, which should be one of the best in the EU. We will continue to improve our internal operations and the quality of decoration, and continue to invest in our people to build the best team possible!