Being an SME in any country in the world requires certain knowledge and experience. What would you suggest to future entrepreneurs who want to start their business?
Carmen: To set up a company, you yourself have to know the income generating machine of the business you want to start. You have to reflect and find where you want to focus the business game. Even if you find technology or restoration interesting, interest is not enough, knowing about telecommunications is not the same as knowing about the telecommunications business; We need to know how the machine that produces income works. I am referring to the machine: what are the necessary and essential expenses, true levers, and what are the investments so that the machine runs in the long term, not in the short term. We must evaluate whether the product or service is demanded by the market, whether domestic (the Spanish or Argentine market) or international. Our guidance should be economical and evaluate if you need someone who can help you with market knowledge.
Pedro: I totally agree, one should do what one loves and start doing something that one wants. But like you said, it’s important to know what you want to do. It’s easier to turn a hobby into a real career than to start with something you don’t have any complete knowledge of. In my opinion, if you carry out a reflection and projection about the strategy to create your company in the long term, you should use SMART objectives that are realistic and measurable. It is like Carmen said, using certain elements in the game that allows the machine to generate money. I think that a person who wants to be an entrepreneur must have a certain maturity and, as I mentioned before with Carmen, know what the business is about. There are many risks, but if someone is willing to face them. Perseverance in my opinion is essential and, in addition, it is necessary to assume a certain rigor in the business, establish objectives and KPIs.
Carmen: As a first step, it is necessary to have a certain maturity to run a business or manage teams. The entrepreneur must be resilient, difficulties can arise at any of the stages of the project: when acquiring the client, in the sale of the project, in the execution and, finally, in the collection.
Pedro: Yes, how many times did I have this situation and I lost a lot of time managing the client’s collection.
Carmen: Of course, you are faced with the arduous task of complaining and you think it is a waste of time because you have executed everything successfully and it turns out that when it is the client’s turn to do his part, he does not comply. You have to be resilient because reality says that most clients pay.
What are the first steps an SME founder needs to take?
Carmen: You have to know if your business idea is a business. Next, I always say that we must do the easy thing first, it is necessary to evaluate how to execute our plan in the cheapest way possible and establish the minimum viable product to test in the market. With this we will test if there is indeed a market, if there are clients who need or want our product or service. Starting some businesses requires little financial effort, for example, lawyers, consultants, etc… If you are a financial consultant, like us, you can create a website on your own. I made my first website with no help other than some instructions from a web page editor.
Pedro: Sure, like me. All with my fingers without being a programmer.
Carmen: Also, I have an acquaintance who has a magnificent wedding dress business. She started in her salon, bought rolls of quality fabrics and invited her clients to her home. After growing up, she opened a business outside. In conclusion, to start a company, it is necessary to check if a business idea is a business and what the essential costs are to prove it. We must have a certain diligence that is simple, order the invoices and classify income and expenses. After a few months, you discover that you are not good at administration or you simply do not want to spend the time on it. Then it’s time to seek help to run the skeleton of the company and organize everything so you can focus on what you are most effective at. You can’t be good at everything. We are not spherical. There is an economic maxim that says that you have to dedicate yourself intensively to what you are best at.
Pedro. I agree with this. We must also be patient, carry out a market analysis. The business is constantly evolving and it is necessary to have the awareness and maturity of knowing what is done well and what is not done well. It is important to plan, see the expenses. I believe that SMART objectives (Specific), measurable (Measurable), achievable (Achievable), realistic (Realistic) and limited duration (Time-bound) are necessary to not give up in the business war.
Carmen: In business, it’s important to know what’s coming in 90 or 180 days. It is a way to avoid certain common problems in companies such as, for example, not having liquidity to pay quarterly taxes (IRPF, income tax in Argentina or VAT) or social insurance. That is why you have to have a minimum strategy that can facilitate the forecasting of your treasury, the “cashflow”.
Pedro: It is evident that companies can suffer bankruptcy due to treasury, especially in the event that numerous taxes have accumulated and they do not know how to forecast expenses. And you need to have someone who can help you. Likewise, there are multiple subsidies from governments that, at the beginning, can contribute to the development of the business.
Carmen: There are numerous aids, but no public money is going to get you out of your trouble, it is, as its name indicates, an aid, not a lifesaver. Public financing is a strategic and long-term decision. It is imperative to maintain a policy of attending to the calls appropriate to our business and business situation; in addition, after the request, there must be a long period of time for the decision and subsequent delivery of the funds.
Pedro: And for that reason, we work to offer this service to future SMEs.
The key to success is?
Carmen: The execution. I have been in this business for 13 years. I have seen many good ideas that do not become a stable business and, at the same time, fabulous companies based on ideas that are nothing new but very well managed. Ideas and plans must be executed well and carried out. You have to look for suppliers, clients, technological systems, lawyers, advisors to also help you. You have to combine the long term with the short term, have a good strategy, execution, tactics to achieve the result. Those who are only generators of great ideas usually do not live well.
Pedro: The key to success is not having paralyzing fear. If fear paralyzes you instead of motivating you, you will not be able to initiate or execute your strategy, as Carmen expressed. We must not be afraid to ask for help, a suggestion. As mentioned above, we can’t be good at everything. Time is money and we cannot waste time in situations where we are not good and leave our strengths behind. Like, for example, in the case of her designer friend, she focuses on designing the best dresses for brides. There is a big difference between fear and caution. It is important to be cautious to have realistic expectations.
Carmen: Of course, prudence is a very good advisor. Limiting beliefs harm us, but in the end the key to success is execution.
Thank you Carmen and Pedro for that talk.
Author: PW Communications
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by CEDOC
