5 financial tips that every entrepreneur should know

In addition to starting from a great idea, the success of a business depends on factors such as effective leadership and daily decision-making, considered based on the analysis of information. With this in mind, below we will provide some financial advice to undertake safely and even know what actions can help in a financial crisis.

In this regard, it is striking that one of the main problems of entrepreneurship in Mexico is the lack of liquidity. According to data from the Radiography of the Entrepreneur of the Association of Entrepreneurs of Mexico (ASEM), it is estimated that 45% of entrepreneurs have had a business that failed, among other problems, due to this important difficulty.

Advice for a successful business

It is considered that among the different financial tips that every entrepreneur should know and apply, the following stand out:

1. Invest in technology to automate processes

Software systems have become a necessity for any enterprise, whether it is to handle accounting, administration, and billing processes, among others. In general terms, its adoption optimizes the time and resources of the company, in addition to facilitating the fulfillment of its obligations. Some advantages of these systems are:

• Have centralized information on customers and suppliers.
• Generate a monitoring of key business indicators.
• Have the possibility of synchronizing the accounting bases with the banks.
• Manage online billing processes easily and quickly.

2. Determine the true cost of the product or service

An issue that few entrepreneurs are aware of is knowing the production costs in detail. It is also necessary to take into account the indirect costs and the salary of the workers in charge of the service that is offered or of the manufacturing tasks.Not considering these aspects is one of the reasons why entrepreneurs experience losses without realizing it.

3. Always have clear goals

Knowing where you want to go in a specific period and knowing the key indicators of the business allows you to generate strategies to achieve goals. Among the most important, we can mention:

• Breakeven. This indicator must be compared with the installed capacity and the size of the market to verify the feasibility of the project.
• Economic units. They are Customer Life Cycle Value and Customer Acquisition Cost. With the help of these indicators, the effectiveness of advertising campaigns can be measured.

4. Set monthly savings goals

Another of the great gaps in entrepreneurship in Mexico is the lack of projections on the income that the company will generate in a given period. These are very important because they help to identify potential risks, but also to ensure the operation of the company and generate savings to respond to any unforeseen events.

5. Resort to financing for SMEs

Although the financing alternatives for SMEs are few and it is essential to carefully analyze their characteristics and the conditions they pose, they will always be a good option in times of lack of liquidity or for the growth of a business. For the above, it is necessary to accurately calculate the costs of a company, also to anticipate the obsolescence of assets and, in this sense, benefit from financing schemes that facilitate their renewal. So far we have shared some tips for a good venture, hoping that will be very useful in the process of opening your own business. At Pymes Capital we offer you personalized guidance and provide tailor-made financing solutions according to the needs of each business.