Abstract
In any crisis or uncertain situation, it is necessary to carefully decide about three main points: when, what to invest, and which financial sources will be used. A profit reinvestment would be an effective and safe way of circulating money flows in a company. The first wave of COVID-19 has changed business conditions not only in the Czech Republic, but also it has an influence on financial decisions of entrepreneurs on how to use financial resources in individual segments of the company. The main goal of this chapter is to compare the reinvestment behavior in the company before the crisis based on primary research data (at least 425 respondents). The chapter includes results of different preferences influenced by COVID-19 uncertainty, and factor analysis has shown that availability of internal resources was important to survive restrictions and to be able to continue in financial planning to sustainably develop the business. Unfortunately, the relationship between business experience and main motives to invest wasn't confirmed.
TopBackground
The business level is intersected by strategic dilemmas that affect the understanding of organizations not only services that have their goals, strategy and want to achieve success. Companies that positively influence the market can divide the business strategy into 3 fundamental categories. The first are companies that support a precisely planned and written strategic plan. The second group of them does not incorporate a written strategy, but it provides a strategic focus. Most of them are small to medium - sized enterprises, where the dominant position is occupied by the owner of the company, who typically has key goals in his head. Such enterprises rely purely on the invention and potential of the owner on whom the most considerable burden of responsibility. The business's strategy is practically replaced by corporate culture. The culture is characterized by a friendly, participatory and team thinking, supported by employee loyalty. The third specific group of companies does not include an effective strategy. At this place, the corporate culture fulfils a significant role, which in a way influences the strategic document and the essential management is a reflection of the corporate culture (i.e. attitudes, standards, which management or owner holds). Naturally, corporate culture cannot function optimally as an effective strategy in the long run, and therefore other companies are characterized primarily by inconsistent management and untargeted steps in decision - making. (Havlíček, 2011). From previous analyses of various types of entities on the market, several groups of internal strategic dilemmas can be deduced (Šebestová & Antonová, 2011, Šebestová & Nowáková, 2013), which can also be applied in small companies in general:
Key Terms in this Chapter
Reinvestment: The act or practice of taking profits or other proceeds from investments and making other investments with them.
External Financial Resources: A source of financing of business activity, which comes outside of business unit such as bank (loans, guaranties), friends, family, business angels, and public support (grants and subsidies).
Investment: The role of investment is to generate the profit in the future. An investment is planned action for the long period. The investment could have different form (financial or nonfinancial assets).
Internal Financial Resources: A source of financing of business activity, which comes from own profit, own capital or from selling own assets.
Business Survival: It is one of business objective. Business survival refers to keeping the business operating for a certain amount of time, especially when some crisis situation comes.
Financial Sustainability: It means selling a product or service at a price that not only cover expenses but also creates a profit. In the crisis situation it means to meet financial obligation within have other alterative possibilities to fund your activities (be able to be self-financed).
Financial Planning: It is a process to achieve financial goals and planned amount of profit or financial ratios. This planning covers all activities and resources needed to manage all the financial process.
Investment Segments: There are main investment types, or asset classes, that you can choose from, each with distinct characteristics, risks, and benefits. In this chapter they are closely connected with strategy goals as well as marketing, company development, human resources, and equipment and technologies.