During the last year, the business environment has experienced various upheavals, where the difficulties caused by the pandemic have been replaced by a rapid increase in the prices of energy resources and materials. Changing market conditions require careful planning and implementation of preventive measures to mitigate negative consequences. Although it is impossible to see into the future, there are various steps an entrepreneur can take to quickly adapt to changes in the business environment.

Cost review and optimization
As a result of a sharp drop in turnover, it is not always possible to reduce costs as quickly, which can result in losses and a lack of working capital. It is essential to be aware of the largest cost items and maintain them in a healthy proportion to revenue depending on the industry. It is recommended to review all regular invoices once a year and consider whether it is really an inconsiderable expense, without which it is impossible to live. Labor is often the biggest cost - it is important to evaluate the efficiency of personnel and the redistribution of responsibilities in time. It should be noted that successful business continuation in difficult conditions sometimes also requires such unpopular decisions as downsizing the team.

Income planning
Good sales today do not guarantee the same stable income tomorrow. It is very important to maintain regular contacts with the main buyers and customers, thus monitoring the future intentions of the partners and possible changes in the order volumes. If the company's operation is based on cooperation with one or a few large buyers, it is equally important to systematically monitor the financial condition of the buyers and the assigned post-payment limits. If, as a result of the research, a worsening of the client's financial situation is detected or other alarming signals appear, such as an increasing tax debt or publicly registered payment delays, we recommend reviewing the terms of cooperation and payment with the specific client. Diversification of buyers and products may take longer, so it will not be a quick-to-implement crisis management activity, but a long-term strategy aimed at by the entrepreneur in order to gradually reduce the concentration of buyers. Diversification of products and services can also be an important aspect for reducing business risk, so that the business does not depend only on the sale of a niche product or service. On the other hand, the free planning tools developed by Capitalia for entrepreneurs can also be useful in cash flow and income planning.

Review of financial obligations
Settlements with lenders in dynamic market conditions can cause quite a bit of worry. It is very important to pay special attention to credit lines and overdrafts that are about to expire, and we encourage you to start negotiations with lenders about the annual extension of credit lines in good time. If you feel that the financial burden is already too great, we encourage you to start negotiations with lenders about schedule changes. On the other hand, if the company has a low amount of financial obligations or no obligations at all, additional short-term financing in the form of a loan or credit line can create an additional sense of security and reserves for unplanned or seasonal costs.

Mitigation of debtors' risks
As a result of fluctuations in the economic situation, the payment discipline of buyers can deteriorate, which can lead to a lack of working capital and even losses in the case of bad debts. Capitalia has previously collected and published various tips for mitigating the risks of debtors , and we invite entrepreneurs to implement them in their daily business as well. It should be noted that it is important not only to regularly monitor existing debtors, but also to thoroughly research new cooperation partners before offering deferred payment.

Refusing to sell unprofitable products and services
If the company is engaged in the production, sale or provision of services of a wide range of goods, it is very important to realize the profitability of each category of goods or services separately. Sometimes companies continue to produce goods or provide services with low profitability in the name of long-term cooperation or other economically unjustified reasons. If necessary, we invite you to abandon unprofitable products or services, accordingly reducing the costs associated with their production and provision.