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 seem clear to us but is likely incomprehensible to our foreign colleagues from prosperous and stable economies.

            The war has been ongoing for a year now, and, to be honest, the predictions about its conclusion are quite hazy. However, Ukrainian entrepreneurs do not wait for ideal conditions. Were there ever ideal conditions? Turbulent 90s, crises in the 2000s, a pandemic, and ultimately, this brutal war. Each new challenge made us stronger, wiser, and more inventive, enabling us to think outside the box. We have grown accustomed to survival because throughout our conscious business lives, we have constantly had to survive. This skill has become a habit, and with the onset of war, it has been fully activated.

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

            Adapting to the wartime conditions requires a different approach to revenue planning and the overall management of businesses. Here are some strategies that have been effective for Ukrainian businesses during these challenging times:

            Diversifying Revenue Streams: Relying on a single source of revenue can be risky during uncertain times. Ukrainian businesses have learned the importance of diversifying their income sources, exploring new markets, and developing alternative revenue streams. This helps to mitigate the impact of disruptions and provides a buffer against potential losses.

            Flexibility in Operations: Adapting to rapidly changing circumstances is crucial. Ukrainian businesses 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 stability even during wartime conditions.

            Strategic Partnerships and Collaborations: Building strong partnerships and collaborations has been instrumental in overcoming challenges. Ukrainian businesses have formed alliances with like-minded companies, both domestically and internationally, to leverage resources, share expertise, and support each other during difficult times. These partnerships provide a sense of unity and strength in the face of adversity.

            Innovation and Product Development: Ukrainian businesses have embraced innovation and invested in research and development to create new products or adapt existing ones to meet the changing needs of the market. By focusing on innovation, businesses can stay ahead of the competition and find new opportunities even during times of crisis.

            Crisis Management and Risk Assessment: Implementing robust crisis management plans and conducting thorough risk assessments have become essential for Ukrainian businesses. This proactive approach allows them to identify potential threats, devise contingency plans, and swiftly respond to unforeseen events. Being prepared for various scenarios helps mitigate risks and ensures business continuity.

            Despite the challenging circumstances of war, Ukrainian businesses have demonstrated resilience, adaptability, and a determination to thrive. By implementing effective revenue planning strategies and embracing innovative approaches, they continue to find ways to grow and succeed. The lessons learned during these difficult times will undoubtedly shape the future of Ukrainian entrepreneurship and contribute to its long-term sustainability.

            I will tell the story of my friend, a craft beer producer, successful restaurateur, and the owner of a network that included fifty grocery stores in Chernihiv Oblast. A year before the war, he underwent a complete modernization of his brewery, increased its capacity, and signed a lucrative contract that promised significant revenue growth for his company. The year 2022 was supposed to be a year of great breakthrough for him, as well as for most of my friends. Instead, it turned out to be a year of significant losses. His brewery was completely destroyed within the second week of the war, and most of his stores were looted.

            During that time, he was 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 the ruins where his modernized brewery had proudly stood, its tanks once filled with arguably the tastiest beer in Ukraine. "Well, let's rebuild!" he shrugged, looking at the remnants of the enterprise to which he had devoted 12 years of his life.

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

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

            Despite the challenges of the  war, these stories highlight the resilience, determination, and adaptability of Ukrainian entrepreneurs. They refuse to be defeated by adversity, and instead, they find ways to rebuild, innovate, and overcome obstacles. Their stories serve as a testament to the indomitable spirit of Ukrainian businesspeople and their unwavering commitment to success.

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

            As mentioned before, my friend, the brewer, used to personally visit his stores. On several occasions, he noticed that during power outages, the stores remained dark, even though they were equipped with generators. "Why?" he asked his employees in surprise. "Beer sells better in the dark! When we turn on the lights, sales decline," they replied. One can search for logic in this situation for a long time, but it's not about logic; it's about conducting business during wartime. And if there are such peculiar patterns, they need to be 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 resumed operations, making significant changes to our processes. Planning was one of the key areas we focused on. Previously, we would create a plan at the beginning 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. When the 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, it would 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, and seize opportunities. While the approach may change in response to the unique challenges of wartime, maintaining a forward-looking mindset and embracing planning remains vital for long-term success.

            First and foremost, regarding export markets, people are afraid to pay in advance to Ukrainian businesses. "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 logical remark, isn't it?

            Contracts with South Africa, which we pursued for three years, and several contracts with Latin America 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-made machines, shipping them to Austria, and selling reports to clients. The most challenging aspect of our business is that our products are not mass-produced - each machine is made to order. Creating inventory, considering the variety of models and the average cost of one machine, which is around 200,000 euros, is an extremely difficult task. On the positive side, the percentage of Ukrainian customers has increased. During the war, they realized how convenient it is to work with a Ukrainian manufacturer because they will come and quickly set everything up. For example, recently, a machine that we prepared for the United States but did not sell was purchased by a Ukrainian company.

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

            There is an opinion that there will be a decline in the economy for about five years after the end of 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 in four months, while other entrepreneurs will wait for five years?" They won't have to wait!

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