Introduction
It can occur in many of the small and medium-sized companies (SMEs) in our country that are frequently managed by people who do not have a financial profile, and consider that these aspects do not fall within their area of responsibility, or that they are issues that they do not concern them, they focus on carrying out operational tasks for which they have direct responsibility, and they think that the quality of their decisions is guaranteed.
It is important to analyze To what extent is this true? Why is it important that any manager of a business is familiar, at least at the user level, with financial information? How should you use this information to improve the quality of your decisions? And with what criteria should decisions, your own or those of others, be evaluated from a financial perspective?
This essay addresses the importance, for any manager with a certain level of responsibility within a small or medium organization, to have a financial vision in order to understand what is happening in their business unit, and the implications that their operational and financial decisions have. about the rest of the company.
Development
In order to be more clear about the importance of finance in the development of the company, it is necessary to know the concept of finance, according to Zvi Bodie and Robert C. Merton:
“Finance studies the way scarce resources are allocated over time. Two characteristics distinguish financial decisions from other resource allocation decisions; the costs and benefits of financial decisions 1) are spread over time, and 2) are generally not known in advance by the donors and no one else ”
Based on the above, it can be seen that finances are the activities related to the cash flow for the acquisition of different goods and how these operations have repercussions within the companies, and with the uncertainty and risk that these activities entail. Bonds are strongly related to property transactions and money management, and which company does not need to know what happens with the monetary resources that it has or invests, and the profits it obtains from these investments.
Small and Medium Enterprises (SMEs) in Mexico have great development potential, since according to the most recent figures generated by the Ministry of Economy (SE, 2012) there are about 4'000,000 companies classified as SMEs, which represents 99.8% of the total number of companies that operate in our country, and which also employ 72% of the economically active population, generating approximately 52% participation in the national Gross Domestic Product (GDP). At this point lies the macroeconomic importance of keeping SMEs with a healthy financial level, thus being able to preserve and develop their potential.
If we go back far back in time we must bear in mind that wealth was obtained especially through wars and conquests of other peoples, already in those times financial activities were carried out but empirically and with very little efficiency. Financial practices in Greece, Egypt and Rome are mentioned but there is no historical foundation, since the State did not allow the discussion of public affairs, only some writings of Jonofonte are highlighted that include an examination of a financial nature.
In the development of the history of our country, financial thinking has evolved. At first it was thought that everything related to finance had an application only in the politics of a State, later it was considered as part of economic activity. Nowadays, in the absence of a financial strategy, many of the small and medium-sized companies in the country use the credit card to solve their capital needs, so the cost of financing is higher, according to the National Commission for the Protection and Defense of Users of Financial Services (Condusef).
Likewise, according to data from researchers from the Universidad Panamericana, Campus Guadalajara (2012) in Mexico, 4 out of 10 micro and small companies use the owner's personal credit card to finance their operations, this practice not only hinders the growth of the company, but it puts the health of the family economy at risk since the interest rates of personal cards are higher than corporate ones, said the director of Market Studies of Condusef, Marco Carrera:
“For most businesses, the main source of capital comes from savings and other forms of personal resources. Unfortunately, the (personal) credit card is also used to meet business needs, which causes the cost of financing to be high, which in turn reduces the profitability of the business »
This panorama in which SMEs are currently in our country greatly hinders their operation and growth, so good financial planning is essential in order to obtain the necessary resources for companies to function properly.
Likewise, to prevent companies from being affected by bad financial practices, Condusef (2012) makes the following recommendations:
- Prepare your personal or family budget. Prepare separately the budget for your SME as a business unit. Determine for yourself a reasonable salary according to the size of your company. Maintain discipline between your personal budget and the budget of your company. Review for each case In which aspects of both budgets, you can improve and save. In each case compare what options you have to obtain more income. It is an analysis in your favor. In case you require financing, evaluate which is the best option for your SME. Avoid using your personal credit card as much as possible to finance the company. Analyze which of the insurance or micro insurance options can support your organization.Increase the trustworthiness of your company before others through the preparation of accounting, fiscal, operational records.
Regarding finances within SMEs is an issue that also concerns the government of our country, since greater support is needed from it and establish the necessary policies to promote the development of SMEs, as well as simplify the processes as well as the granting of financial support.
conclusion
In conclusion, we can see that the financial status of SMEs in our country is still based on empirical knowledge, and that most administrators lack the necessary tools to be able to make decisions regarding this issue, as well as the macroeconomic conditions regarding the Financing sources greatly affects the growth of companies.
Greater support from the government is necessary in order to have more accessible financing and to be able to provide companies that really need investment to develop the resources to do so.
On the other hand, since the ideas, plans and projections exist, we must not forget that the person in charge and the central actor within finance are the same SMEs and those who administer them, since they must not detach themselves from their responsibility and plan. in a more technical way the investments to be made. The health and well-being of companies, SMEs, can be diagnosed by analyzing their numbers. It is important to learn to understand and analyze business finances to know what was done and the results that were obtained with the decision-making, and that they help us prepare for future decisions.
Finally, we must not forget one of the characteristics that differentiate financial decisions from other types of decisions, quoting Zvi Bodie "the costs and benefits of financial decisions are generally not known in advance by the decision makers and by anyone else" However, good financial planning can help prevent these situations from arising and weaken the structure of the company.
