REVENUE PLANNING

           It has been a year since the war began. A few weeks before we marked one year,  I met with my friends, entrepreneurs from Chernihiv. We were not discussing our losses, although each of us had experienced them to some extent. Instead, we talked about the strategy of development for our companies. There were six of us at the meeting, and all of us had resumed the operations of our businesses within two to four months. Naturally, our focus shifted towards growth and scaling.

           This logic may seemclear to us but is likely incomprehensible to our foreign colleagues fromprosperous and stable economies.

            The war has beenongoing for a year now, and, to be honest, the predictions about its conclusionare quite hazy. However, Ukrainian entrepreneurs do not wait for idealconditions. Were there ever ideal conditions? Turbulent 90s, crises in the2000s, a pandemic, and ultimately, this brutal war. Each new challenge made usstronger, wiser, and more inventive, enabling us to think outside the box. Wehave grown accustomed to survival because throughout our conscious businesslives, we have constantly had to survive. This skill has become a habit, andwith the onset of war, it has been fully activated.

            War is a massivecrisis where risks and stakes are much higher than in previous crises. In placeof the fear of losing profit or going bankrupt, a new fear has emerged - thefear of losing everything, including our own lives. What remains constant isthe readiness of Ukrainian businesspeople to rise again and again, to build,and to achieve their goals.

            Adapting to thewartime conditions requires a different approach to revenue planning and theoverall management of businesses. Here are some strategies that have beeneffective for Ukrainian businesses during these challenging times:

            Diversifying RevenueStreams: Relying on a single source of revenue can be risky during uncertaintimes. Ukrainian businesses have learned the importance of diversifying theirincome sources, exploring new markets, and developing alternative revenuestreams. This helps to mitigate the impact of disruptions and provides a bufferagainst potential losses.

            Flexibility inOperations: Adapting to rapidly changing circumstances is crucial. Ukrainianbusinesses have shown great flexibility by adjusting their operations,optimizing their supply chains, and being agile in responding to market shifts.This allows them to stay resilient and maintain a certain level of stabilityeven during wartime conditions.

            Strategic Partnershipsand Collaborations: Building strong partnerships and collaborations has beeninstrumental in overcoming challenges. Ukrainian businesses have formedalliances with like-minded companies, both domestically and internationally, toleverage resources, share expertise, and support each other during difficulttimes. These partnerships provide a sense of unity and strength in the face ofadversity.

            Innovation and ProductDevelopment: Ukrainian businesses have embraced innovation and invested inresearch and development to create new products or adapt existing ones to meetthe changing needs of the market. By focusing on innovation, businesses canstay ahead of the competition and find new opportunities even during times ofcrisis.

            Crisis Management andRisk Assessment: Implementing robust crisis management plans and conductingthorough risk assessments have become essential for Ukrainian businesses. Thisproactive approach allows them to identify potential threats, devisecontingency plans, and swiftly respond to unforeseen events. Being prepared forvarious scenarios helps mitigate risks and ensures business continuity.

            Despite thechallenging circumstances of war, Ukrainian businesses have demonstratedresilience, adaptability, and a determination to thrive. By implementingeffective revenue planning strategies and embracing innovative approaches, theycontinue to find ways to grow and succeed. The lessons learned during thesedifficult times will undoubtedly shape the future of Ukrainian entrepreneurshipand contribute to its long-term sustainability.

            I will tell the storyof my friend, a craft beer producer, successful restaurateur, and the owner ofa network that included fifty grocery stores in Chernihiv Oblast. A year beforethe war, he underwent a complete modernization of his brewery, increased itscapacity, and signed a lucrative contract that promised significant revenuegrowth for his company. The year 2022 was supposed to be a year of greatbreakthrough for him, as well as for most of my friends. Instead, it turned outto be a year of significant losses. His brewery was completely destroyed withinthe second week of the war, and most of his stores were looted.

            During that time, hewas receiving treatment in one of the district hospitals in Western Ukraine.After rehabilitation, this determined entrepreneur returned to Chernihiv,swallowed a handful of pills prescribed by his doctor, and alone went to theruins where his modernized brewery had proudly stood, its tanks once filledwith arguably the tastiest beer in Ukraine. "Well, let's rebuild!" heshrugged, looking at the remnants of the enterprise to which he had devoted 12years of his life.

            And he startedrebuilding, quite literally. He made an arrangement with another beer producerin Dnipro to rent their facilities. He traveled across Ukraine alone,purchasing the necessary equipment parts to set up the production line. Andwhen the first batch of beer was brewed, he got behind the wheel of a truck andpersonally delivered the product to Chernihiv—his own restaurants and storesthat he had managed to rebuild. "If fate gave me a chance to survive, thenI am capable of rebuilding my business, even if it means going back 12-13years," commented my friend. While he hasn't built a new brewery yet, heplans to do so in the near future. However, by the anniversary  of the war, he had already reached pre-warproduction levels, and he laid out a 25% growth forecast for 2023.

            Another friend fromour business club shared how his trading company changed its planning system.Starting from October 10, when rocket attacks intensified, his experts tiedrevenue planning to the "flight schedule" and compiled statistics onwhich products customers returned to after the alarm subsided and which theydidn't. Guess what? All the forecasts aligned, and the business was operatingwith a working plan, even if it was short-term.

            Despite the challengesof the  war, these stories highlight theresilience, determination, and adaptability of Ukrainian entrepreneurs. Theyrefuse to be defeated by adversity, and instead, they find ways to rebuild,innovate, and overcome obstacles. Their stories serve as a testament to theindomitable spirit of Ukrainian businesspeople and their unwavering commitmentto success.

            There are differentways of doing business: "as it goes" (also known as post-mortemaccounting) and "as it should be" (with planning). I am a proponentof the latter approach, both in peacetime and during wartime. The method ofplanning can change based on circumstances, but war is not a reason to resortto post-mortem accounting.

            As mentioned before,my friend, the brewer, used to personally visit his stores. On severaloccasions, he noticed that during power outages, the stores remained dark, eventhough they were equipped with generators. "Why?" he asked hisemployees in surprise. "Beer sells better in the dark! When we turn on thelights, sales decline," they replied. One can search for logic in thissituation for a long time, but it's not about logic; it's about conductingbusiness during wartime. And if there are such peculiar patterns, they need tobe taken into account.

            On February 24, 2022,my PET Technologies plant in Chernihiv stopped operating  for two months. We had power outages,equipment failures, and other challenges, but eventually, we resumedoperations, making significant changes to our processes. Planning was one ofthe key areas we focused on. Previously, we would create a plan at thebeginning of the year and adjust it during the annual strategic session in July.Now we make quarterly adjustments. But most importantly, we have a plan. Whenthe top management showed me the plan for 2023, I asked, "Are you serious?Are you ready to sign under this?" The guys signed. Before the war, itwould have been a pessimistic scenario, but now it is extremely optimistic,considering all the difficulties brought about by the war.

            In challenging times,having a solid plan and the ability to adapt and make adjustments is crucial.It allows businesses to navigate uncertain circumstances, mitigate risks, andseize opportunities. While the approach may change in response to the uniquechallenges of wartime, maintaining a forward-looking mindset and embracingplanning remains vital for long-term success.

            First and foremost,regarding export markets, people are afraid to pay in advance to Ukrainianbusinesses. "Don't get me wrong, we're all with you. But what if we pay,and something happens to your plant...?" - this is a completely logicalremark, isn't it?

            Contracts with SouthAfrica, which we pursued for three years, and several contracts with LatinAmerica have been canceled. But this is not a reason to despair. What do we do?For the first time in the company's history, we are producing ready-mademachines, shipping them to Austria, and selling reports to clients. The mostchallenging aspect of our business is that our products are not mass-produced -each machine is made to order. Creating inventory, considering the variety ofmodels and the average cost of one machine, which is around 200,000 euros, isan extremely difficult task. On the positive side, the percentage of Ukrainiancustomers has increased. During the war, they realized how convenient it is towork with a Ukrainian manufacturer because they will come and quickly set everythingup. For example, recently, a machine that we prepared for the United States butdid not sell was purchased by a Ukrainian company.

            On the anniversary ofthe Russian invasion, we fulfilled a rather complex order for a client fromSaudi Arabia. It was a mold for a very rare Italian Sacmi machine. The moldcontained two cavities in a single form. We made a total of 13 such molds. Thismachine produces around 50,000 bottles per hour (two huge truckloads in onehour of operation). This is the Ukrainian business's response to theanniversary.

            There is an opinionthat there will be a decline in the economy for about five years after the endof the war. I strongly disagree with this. During our meeting of entrepreneurs,I asked, "Guys, why did we manage to resume our company's operations infour months, while other entrepreneurs will wait for five years?" Theywon't have to wait!

            Despite the challengesfaced during wartime, Ukrainian businesses are finding innovative ways toadapt, attract local customers, and explore new markets. Their resilience anddetermination are driving them to overcome obstacles and continue operating.The belief in a swift recovery and the ability to rebuild the economy quicklydemonstrate the entrepreneurial spirit and optimism of Ukrainian businesses.