Controlled Chaos. Financial Strategies in Uncertainty
Flexible planning
In an uncertain environment, rigid financial plans can play a cruel trick. It is important to regularly review financial plans and forecasts, adapting your strategy to current conditions. If demand for certain products drops, you need to reallocate resources quickly. Conversely, if the market situation is favourable, invest.
Prepare a ‘plan B’ for each crisis scenario. For example, if there is a 30% drop in revenues, think in advance what costs can be cut and what solutions would be best in this situation.
Debt management
In an uncertain environment, it is important to manage debt carefully. Short-term borrowing is a risk, especially if the company does not have a sustainable cash flow. It is better to raise finance, borrow for a long term, on terms favourable to the business and only when it is really necessary. If the market is unstable, it is more profitable to re-lend or fix interest rates.
It is necessary to regularly monitor the company's debts and income, controlling their ratio.
In an uncertain environment, rigid financial plans can play a cruel trick. It is important to regularly review financial plans and forecasts, adapting your strategy to current conditions. If demand for certain products drops, you need to reallocate resources quickly. Conversely, if the market situation is favourable, invest.
Prepare a ‘plan B’ for each crisis scenario. For example, if there is a 30% drop in revenues, think in advance what costs can be cut and what solutions would be best in this situation.
Debt management
In an uncertain environment, it is important to manage debt carefully. Short-term borrowing is a risk, especially if the company does not have a sustainable cash flow. It is better to raise finance, borrow for a long term, on terms favourable to the business and only when it is really necessary. If the market is unstable, it is more profitable to re-lend or fix interest rates.
It is necessary to regularly monitor the company's debts and income, controlling their ratio.
Investing in technology and automation
Implementing CRM systems, automating accounting, and using analytics for forecasting all help reduce costs, improve inventory management, and respond faster to changes in demand. Automation not only reduces costs, but also helps you make more accurate forecasts, analyse data and make informed decisions.
Implementing CRM systems, automating accounting, and using analytics for forecasting all help reduce costs, improve inventory management, and respond faster to changes in demand. Automation not only reduces costs, but also helps you make more accurate forecasts, analyse data and make informed decisions.
‘Be afraid when others are greedy and be greedy when others are afraid’ Warren Buffett
Be prepared to quickly adapt the business to what you can't control and manage what you can. This is the formula for successful management.
We live in an era of change and uncertainty. Economic crises, changes in legislation, geopolitical events, currency fluctuations, pandemics and natural disasters - hundreds of external factors affect business.
Can you protect your company from unexpected shocks? In this article, we look at a few key financial strategies that can help businesses remain resilient and even find new opportunities in the midst of chaos.
Diversification of risks
It is dangerous to limit the range of products, to ‘tie’ the business to a certain group of products or one country. One of the most effective strategies is to diversify your investments and business models. What happens if demand drops sharply or exchange rates do not play in your favour? Diversifying your product range or entering new markets can help mitigate risk.
Vertical diversification improves or changes the production chains that go from the manufacturer to the end consumer. Horizontal diversification involves introducing new products or lines of business to attract other target audiences. In conglomerate diversification, a company expands its business in areas and spheres that are completely unrelated to its core business.
Creation of a reserve fund
A crisis is a blow to business. It is followed by redundancies or emergency, more often than not, unprofitable lending. How can you avoid this?
A contingency fund is a financial cushion to help you get through times of crisis. The ideal situation is to have an amount in the account that can cover at least 3-6 months of expenses for: staff salaries, rent, tax payments and other mandatory payments.
Be prepared to quickly adapt the business to what you can't control and manage what you can. This is the formula for successful management.
We live in an era of change and uncertainty. Economic crises, changes in legislation, geopolitical events, currency fluctuations, pandemics and natural disasters - hundreds of external factors affect business.
Can you protect your company from unexpected shocks? In this article, we look at a few key financial strategies that can help businesses remain resilient and even find new opportunities in the midst of chaos.
Diversification of risks
It is dangerous to limit the range of products, to ‘tie’ the business to a certain group of products or one country. One of the most effective strategies is to diversify your investments and business models. What happens if demand drops sharply or exchange rates do not play in your favour? Diversifying your product range or entering new markets can help mitigate risk.
Vertical diversification improves or changes the production chains that go from the manufacturer to the end consumer. Horizontal diversification involves introducing new products or lines of business to attract other target audiences. In conglomerate diversification, a company expands its business in areas and spheres that are completely unrelated to its core business.
Creation of a reserve fund
A crisis is a blow to business. It is followed by redundancies or emergency, more often than not, unprofitable lending. How can you avoid this?
A contingency fund is a financial cushion to help you get through times of crisis. The ideal situation is to have an amount in the account that can cover at least 3-6 months of expenses for: staff salaries, rent, tax payments and other mandatory payments.
Cost optimisation
Optimising a company's costs without compromising on product or service quality is not an anti-crisis and temporary measure, but a strategy that helps a business remain sustainable.
For example, you could consider renting equipment instead of buying it, outsourcing non-core tasks, or renegotiating contracts with suppliers on more favourable terms.
Financial management under uncertainty is about balancing what we can control with external factors that are beyond our control. Companies that implement flexible financial strategies, manage risk and prepare for crises in advance, stay afloat and emerge from the crisis stronger than they were before it.
LLC "EIFOS HUB" is engaged in financial consulting and auditing. We offer comprehensive solutions for effective financial and investment management under conditions of uncertainty. We help businesses relocate and develop strategies for entering the markets of a particular country.
Optimising a company's costs without compromising on product or service quality is not an anti-crisis and temporary measure, but a strategy that helps a business remain sustainable.
For example, you could consider renting equipment instead of buying it, outsourcing non-core tasks, or renegotiating contracts with suppliers on more favourable terms.
Financial management under uncertainty is about balancing what we can control with external factors that are beyond our control. Companies that implement flexible financial strategies, manage risk and prepare for crises in advance, stay afloat and emerge from the crisis stronger than they were before it.
LLC "EIFOS HUB" is engaged in financial consulting and auditing. We offer comprehensive solutions for effective financial and investment management under conditions of uncertainty. We help businesses relocate and develop strategies for entering the markets of a particular country.
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