How Ukrainian Entrepreneurs Will Boost Profits in 2024.

By Viktor Andrukhiv, Co-founder of Fibermix and Savex Minerals

The War in Ukraine presents a substantial challenge for businesses. Entrepreneurs have grown accustomed to grappling with these challenges over the past two years. Despite all the hardships, over half of CEOs anticipate positive business development trends in 2024.

In my view, there are five components that should not only help businesses endure during times of war but also enhance their profitability.

1. Venturing into foreign markets.

At the onset of the full-scale war, Ukrainian businesses suffered a significant setback, incurring losses of almost $83 billion. The market contracted, and its growth is now considerably constrained. Persistent external threats contribute to a decline in the purchasing power of Ukrainians. Although our domestic market holds substantial development potential, entrepreneurs should now shift their focus to alternative options—foreign markets.

Ukrainian businesses actively turned their gaze toward the West early in the COVID-19 pandemic. Quarantine restrictions and a dip in European production compelled Western companies to scout for suppliers abroad, and entrepreneurs deftly seized the opportunity. For instance, my firm expanded into the markets of Poland, Latvia, and Bulgaria during this period.

With the eruption of a full-scale war in Ukraine, we keenly sensed that Western businesses were genuinely prepared to offer assistance. ‘Made in Ukraine’ gained global prominence. Today, around 70% of our firm’s orders originate from Europe, a significant increase from 35% before the war.

Entrepreneurs aspiring to enter foreign markets should once again place special emphasis on quality and technology. Venturing abroad is now about more than just business; it also shapes Ukraine’s image on the international stage. Failing to meet obligations is not an option, as it risks letting down partners and eroding their trust.

The key to success in foreign markets lies in consistently fulfilling obligations. The ideal formula is quality + speed + service. This formula has proven effective in the domestic market and has long been ingrained in our business practices. In my view, Ukrainian entrepreneurs have outpaced their Western counterparts in numerous aspects, both in terms of quality and service. 

2. Increase in production volumes.

This point naturally stems from the previous one. Ukrainian entrepreneurs are gearing up to boost production volumes. For instance, in the past year, our company faced a surge in orders surpassing our production capacity. Consequently, we had to turn down substantial foreign contracts. Thus, on the brink of the new season, we invested in new equipment. With this acquisition, the company is set to produce an additional 60-70 tons, meeting the demand from both domestic and foreign markets.

Investing in equipment always entails a financial commitment. If resources are currently constrained, exploring government grant programs or considering a loan may be worthwhile. 

3. Diversification, new products.

Our strategy involves expansion not only in terms of production volumes but also in our product line. This holds equal significance across all markets. Undoubtedly, Ukrainians are gearing up for a substantial reconstruction of the state, which is inevitable. Entrepreneurs anticipate high demand in various construction-related sectors. Products potentially essential for these developments need to be created now, introduced to the audience, and integrated into the market. The broader the company’s product range, the greater its potential.

Therefore, it’s crucial to continue exploring new directions and engage not only top managers but all employees in generating ideas. Establishing an environment of trust where every employee feels empowered to propose ideas is paramount. Furthermore, management should actively consider and evaluate these ideas. 

4. Priority No. 1 is people.

In 2024, Ukrainian business leaders are set to invest in their teams actively. There is considerable discourse about the personnel shortage, particularly in terms of qualified employees. By 2023, a quarter of surveyed companies are expected to face a shortage of workers. As production scales up, the demand for personnel will inevitably increase. In our case, we’re gearing up to bring on board 10-12 additional employees this year.

Skills play a pivotal role. I’m aware of some companies equipped similarly to ours, yet they fall short of achieving desired results simply due to the insufficient qualification levels of their employees.

However, it is not only crucial to assemble a professional team but also to motivate them effectively and prevent turnover. This is also a financial consideration. For our company, it is nearly five times more cost-effective to retain, develop, and train our team than to hire new personnel.

5. The environment determines success.

Now, more than ever, it is vital to maintain quality and swift communication with individuals who share a similar worldview and inspire personal growth. Entrepreneurs should stay connected, delve into successful cases, engage with company leaders, and foster communication. Networking can resolve challenges related to substantial orders and raw material prices.

Where can you cultivate these valuable connections? Look no further than business clubs and educational centers that bring together specialists from across the country and beyond. Investing in the environment translates to an investment in development, a principle that extends beyond business to sports and hobbies.

Close business communication provides access to information that cannot be found on the Internet or in books. These are practical life hacks from people who know their business and have been successful in it. What is the price of such advice? It is priceless.

All these five components, in my opinion, will allow Ukrainian entrepreneurs to survive and increase profits in 2024. But, of course, only if you have a sufficient level of motivation, faith in your business, willingness to work and the ability to overcome challenges and force majeure. Because acts of God will happen. And that is part of business.

If Ukrainian businessmen have survived the crisis of February-March 2022 and continue to develop existing businesses and start new ones, they should have enough strength to face all possible new challenges.