How an entrepreneur can preserve net profit in an unstable economy

Monitor changes in net profit margin each month. If you notice significant fluctuations, perform a vertical analysis of expense items at every profit level, starting with gross margin.

In times of crisis, the key indicators to monitor are operating profit and net profit.

Operating profit shows the overall growth of business expenses, excluding taxes and loan payments.

Operating Profit = Revenue − Direct Costs − Indirect Costs

Direct costs increase along with sales volume: the more the business produces and sells, the more it spends on raw materials, packaging, logistics, and wages for production employees.

Indirect costs are not tied to sales volume and are incurred by the company regardless of production levels. These include office rent, salaries of managers and administrative staff, and marketing expenses.

In 2026, businesses will operate under new rules: some benefits for SMEs will be abolished, tax administration costs will rise, and VAT will be added to indirect expenses. All this will negatively affect operating profit, so assessing its volume and profitability will require greater attention.
Alla Potehina,
financial expert at Adesk, a small business accounting service

To understand what percentage of revenue remains after deducting all expenses, you need to calculate the operating profit margin.

Operating Profit Margin = Operating Profit ÷ Revenue × 100%

This indicator should be calculated for several months and evaluated in dynamics to track the overall growth of business expenses. If you see the margin declining, it signals that expenses are rising faster than revenue, putting the business at risk of a cash gap. If the reason is not seasonal decline, you need to identify the cause and make managerial decisions.

Net profit shows how much money remains after all business expenses, taxes, equipment depreciation, and loan servicing.

Net profit also includes retained earnings, which remain after dividends are paid and can be reinvested into business development. Under current economic conditions, it is advisable to postpone dividend withdrawals and instead allocate the remaining profit to building a financial cushion. In case of unforeseen situations, such as a revenue drop, this cushion will act as a “lifeline” for the business.

Net Profit Margin = Net Profit ÷ Revenue × 100%

Monitor changes in net profit margin each month. If you notice significant fluctuations, perform a vertical analysis of expense items at every profit level, starting with gross margin.