In this article we focus on an issue of utmost importance to you and your business, but first let's check the data of a research.
According to Sebrae, 71% of micro-enterprises (ME) and small enterprises (SOEs) close the doors before completing five years of operation.
Made collecting information with the micro and small entrepreneurs, used to justify the main factors of these numbers, economic instability, difficulty to finance, in High interest and taxes, purchasing power falls.
Actually these justifications are very relevant indeed, and in fact interfere directly for companies to close with so little time. But in the research, the main cause of this phenomenon is another.
You surely must have noticed in your own city, there are a large number of shops, restaurants, finally, companies from various branches closing the doors and do not open more.
Of course, we can't generalize the reason for the closures, but we can say with certainty that the main cause is the lack of financial and strategic planning. This is the main reason according to the research.
In this article we will talk about precisely this issue, financial planning and how it can help in the success of your business.
Conceptualizing, financial planning is a financial management tool that takes care of part of the financial organization of a company.
It contains information such as the company's situation, data on revenues and expenditures, objectives and goals to be traced, and strategic planning to complete this goal or objective.
The financial area is the principal indicator of the company's growth. It is based on the financial report data that a company can say the growth is the company or sales in that period.
This data is directly linked to its billing, knowing well that the company would be in profit (growth) or injury (fall).
Understand and participate in the financial planning of your company is in fact essential for any manager. Getting to do a reading and understanding the data passed in a financial planning is a big difference.
The above research showed that the main factor in the closure of companies is the lack of financial planning, which often is unknown to the administrator and this can have serious consequences.
Financial planning should say exactly revenues, expenditures and expenses of the company, creating value indicators, origin and date. In this way, the manager will ease giving any indebtedness of the Company and thus be able to plan according to the situation of the company.
A good financial plan should contain the following information.
- The company's debt management:
The company's debt management should be able to clearly inform the general debt, giving relevant data and strategic indicators that the manager can position themselves with these data.
For your company's debt percentage, simply divide the total amount of liabilities with total amount of active then, multiply the result found by 100. In this case we would have the debt percentage in percentage.
We will detail a little more for better understanding but let's first understand what makes up the assets and its liabilities from its balance sheet;
Active: available balances in cash, inventory, accounts receivable, the company's assets, etc.
Liabilities: Accounts payable, loans and financing, salaries, etc.
Basically the asset is in the positive balance of your company and the liability is in the negative.
Let's assume that your institution has a total assets of $: 500,000.00 and a total liability of $: 350,000.00.
To calculate the overall debt just divide the value of 350,000 by 500,000. In this case we would have a score of 0.7.
Getting this result 0.7 multiply it by 100 and so would the result of 70% had general debt of your company.
We can still go a little deeper in this example and show a little about the composition of the debt. We know that the liability can be divided into long and short term. In this case we could know what percentage of debt is represented in the short term and what is the long-term debt. Let's follow the example.
We know that the total liabilities of the Institution is $ 350.000,00. Let’s assume that the short-term liabilities amounts to R $ 150,000.00 and the long term equivalent to $ 200,000.00.
If we divide the value of liabilities to short-term 150,000 per 350,000 have the result of 0.42. To multiply it by 100 we will have the result of 42%. This means the overall indebtedness of a company consists of 42% short term and 58% long term.
To do the analysis and evaluation of your business with this data must first be understood that the higher this percentage, the worse the situation of the company and the greater the risk of this activity. In this example the debt ratio is very high.
If in general the institutions of teachings that have a general debt of 20% to 30%, this means that the result is not good and should be made an analysis and revised spending in order to improve these numbers.
This even if the other educational institutions Distance own a percentage of 50 to 60 in its overall debt, meaning that the result of 40% is good, but it is always oriented to improve more and more.
The indebtedness management acts directly with your company. Let's put two situations in evidence:
planning the reduction of the overall debt: Through concrete data the manager is able to articulate its debt and knowing which fit in the long run and which fit the short term even know prioritize the situation and thus solve financial problems of the company.
The manager can also check what expenses are unnecessary and doing cutting them so that the company has an ever-decreasing rate.
Investment Planning x overall debt: Making an investment requires a series of hard data that has no future problems. We must know first of all if the required investment will return a short or long term and what impact it will cause the company.
An investment will impact both active and passive in its balance sheet. But be careful, because depending on the situation of a company, it may be not a good time to effect any investment and the company needs to put other things in priority.
A debt management report can predict the impact that the investment would cause analyzing the values and can more accurately it is a viable time or not is for action.
In this way, the company can create a strategy to achieve that become viable investment and minimize as much as possible of its negative impact.
- Cash Flow Management:
Cash flow is a crucial factor for the financial control of your company. You should tell the inputs and outputs of the company thus making the control of the financial operations of the company.
Cash flow can pass more accurately the situation of the company, if there was profit or loss in a given period.
The most targeted is to have a note with this information, either through a financial system or even creating a spreadsheet. Separate inputs and outputs in great detail and put as much information as possible to identify that movement. Also tell if this expense was paid or not.
Remember if! The more information to facilitate their reading of the cash flow, the better for you.
Knowing the inputs and outputs of the company, causes the manager has more control and advance as to future expenses, unforeseen, replacement and thus give all the necessary support may provide problems.
- Strategic Financial Management
It should contain the cash projections, economic results and resource capitation options short and long term.
The strategic financial management is where we define the company may or may not make any investment, loan or financing, may provide the status of the company in the future and avoid certain problems.
It is important to emphasize that we should avoid errors in financial reporting. The management should be very active in this part and always have an attention along with other sectors so that this does not happen.
The strategic financial management is the positioning on the results of financial reports obtained in all planning.
Having a good financial strategy of the company will make it is not abused and stand firm in the face of any situation.
Strategies obtained by your company will now vary according to your goals and objectives. If your focus is to increase its capital, or hire a larger team, or provide new products and services.
Generally a well-designed strategy should go through these steps: Trace a goal or goal: Before creating a strategy, we must first know where we want to go. The starting point is to know your target goal.
Search: Study the ways to achieve the goal trace. Search and analyze possibilities, risks and opportunities, do market research, but remember to always keep your feet on the ground. Respect the limits of your institution and work in the safest possible way. Taking risks may be necessary at times, but always keep aware of what is doing and its possibilities.
Analyze costs: Create a strategy will require other expenses, is to research, consulting, teams, see whether it is feasible for the Institution and there is agreement.
Reap the benefits: Extract the maximum result, either materially or personally. The experience will make you able to do something better.
Create a planning requires time and study. A micro or small business has a big focus on the company and its products / services and other situations such as managing employees, and suppliers just not able to devote to make all this work.
Having an employee who would be exclusively for this sector can also be an alternative, but for this, having a private consultant could cost a lot.
Knowing these difficulties NoChalks proposed to help. A distance learning platform can have customers from all over the country and depending on its follow-up, the whole world. So the whole mechanism for clients from acquisition to payment for the service is done online. This makes it even more difficult for financial control in one platform.
In previous articles showed that NoChalks Platform Integration with payment gateway. For various reasons such as security and reliability, this makes using the platform you can take a financial report with gross revenue gained by their courses on their platform.
This report will greatly to its control and planning, in addition to saving time to be joining the payments separately and making the sum of it, as this result will already be delivered into his hands.
Access to the report is very simple and fast. By accessing the "Reports" option will appear in the center of the screen to the administrator reports, then you need only click on the "Graphics" option and is all your report there.
The same can filter the desired data annually.
With this report in hand you can add it other financial information from your institution and get the results you need for your planning and strategy.
Another advice we give to you and your business is to always consult your accountant. The even know the reality of your business as much as you and has all the necessary preparation to give you the most correct guidelines.
Your accountant is a crucial part in your financial activity of your business and work with it can give positive results and give you all the support necessary so that your choices are correct.
12/Jul | by: Marcelo Souza Campos
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