The economic crisis caused by the Covid-19 pandemic has caused financial problems for some companies or small businesses. If you have a business and you face this situation, we share some recommendations that can help you keep it in operation.
Businesses can go the wrong way, especially under current conditions. Hence the need to review the strategy followed to determine failures, administrative incompetencies must be sought. Small flaws that may affect your business activity must also be detected. Remember that some companies facing problems only needed a decision maker to find the right path.
If you decide to apply for a loan, compare the conditions, costs and benefits that financial institutions offer you. Photo: Pixabay.
Examine the situation of your company
The first thing to do is the diagnosis of your company, you need to know if the results achieved correspond to the established objectives, and also, if the progress made was made in the time you estimated. With this information you can define other goals that correspond to the capacities and limitations of your company and then define the strategy that you are going to follow.
There are two concepts that are useful to know the situation of your company: the recommended minimum performance and the desired minimum performance. If you identify them, you will have a clear idea of the location of your company.
You need to periodically update the financial information of your company, you must also be disciplined to review the most relevant performance indicators, the most significant such as: sales, profit margins and cash flow.
The financial situation of your company should be reviewed every month, so that you have the opportunity to redefine course and change strategy throughout the year. If you do this only at the end of the year it may be too late, as it will no longer be possible for you to make the changes that are required.
Find out what to do and where to do it
It may not be enough for you to identify the performance of your company, you need to locate where the mistakes that could be made are and what your company could be failing to do.
It is very important that you develop a strategic plan in which you establish clear performance objectives, which can be followed with organization and effectiveness, so that your company achieves the desired results.
Use credit effectively
It is necessary that the resources you obtain through credit are used responsibly, that you make punctual payments. In this way you can reactivate your business.
You can request your credit from Cooperative Savings and Loan Societies (SOCAP) and Popular Financial Societies (SOFIPO), as well as other financial institutions that grant microcredits, that is, credits to micro and small entrepreneurs who need resources.
If you decide to apply for a microcredit, consider the following:
It is the amount that the financial institution charges on what it lends you. It varies depending on the amount of the debt and the periodicity in which you must make the payments.
Credit payment periodicity
It is the time that elapses between each payment that must be made for the credit, it can be weekly, biweekly or monthly.
It is the time when you commit to finish paying the credit.
They are additional charges to the interest rate, in the case of this credit they cover administrative expenses such as collection or research and socioeconomic studies.
They are the conditions for the credit to be granted, such as having a guarantee or that you have a good financial history. Take into account what you will pay for the amount of money you will request and make sure that you will be able to fulfill the commitment and that you will not fall behind in payments.
So that you know your payment capacity, check the income statements of your company or business, or your budget, from your company’s income, subtract the expenses and payments you make, also consider that a part of the profit will be used to cover your needs. The result of this will be the amount that you can allocate to pay the credit.
Make sure of the interest rate charged for the credit, if it will be fixed from the moment you formalize the contract or it will vary due to economic factors. If this is the case, the amount you pay could increase and your ability to pay could be impaired.
Increase your sales through technology
Take advantage of technological development, make online sales. Even if you don’t have your own website, you can offer your products or services on social networks and make home deliveries.
You can also use applications (apps) to advise you on financial issues, sales, access to more customers or payment systems.
There are also applications that can help you keep a balanced budget for your business. Other applications can help you with the management of your bank accounts, your payments and your expenses and there are even them for you to manage your business, pay for online services or prepare personalized invoices.
Also keep in mind
If you decide to contract a financial product or service, compare the costs and benefits they offer you.
If you want more information, check the National Catalog of Financial Products and Services, which can be found in the Condusef Bureau of Financial Entities.
More information in our Credits Section.