Summary
At present, business finance is described as the economic science dedicated to the study of the fundamental economic units, as well as the different markets and the prices that are formed in them.
Nowadays, not only large companies must be aware of this, that is, SMEs in Mexico have little financial information, they do not have a department as such within their company and the administrator and / or owner of the company believes or think this is not important.
The finance area becomes relevant in the daily operation of organizations. Within the financial management of companies there are three fundamental decisions that must be made: investments, capital structure and dividend policy.
The fundamental part of an SME is its creator and that he himself has knowledge in administration and finance, one for the control of his company and the other for its solvency, because when we think about growing we must create a solid base to be able to undertake
Introduction
What happens when small and medium-sized companies in our country do not have a financial vision? Would this be a reason for the closure of SMEs in the first year? It may happen that many of the small and medium-sized companies in our country are frequently managed by people who do not have a financial profile and are unaware of it. that they consider that this is not important and it is not within their responsibilities to know.
Finances are not only a matter for the financial manager of the company, but for any person in charge of another department and always ultimately the CEO of the company. It is possible that many of the problems that SMEs have gone through or are going through in Mexico are caused by a null or deficient financial training of those responsible for them
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.
II.- Background
Finance is considered a branch of economics from an article written in 1897 by the German Irving Fischer in which he talks about a new discipline: Finance. The origin of the name is due to the Romans who called money finus.
In the beginning, finance was primarily aimed at obtaining funds for companies, the state and any type of lucrative business. However, in 1929 a great world economic crisis arises that generated a large number of business bankruptcies, millions of unemployed people and poverty in general. It is then when finance restructures its objective and concludes that its main objective would be to preserve the interests of creditors, that is, to try to recover their funds.
Over the years and the circumstances that arose, the purpose of finance changed and took on a more precise meaning, concluding that the main function of finance will be to optimize the risk-return ratio in order to seek the creating value and putting into operation new investment schemes.
At present, business finance is described as the economic science dedicated to the study of the fundamental economic units, as well as the different markets and the prices that are formed in them.
III.- Development
In a globalized world like the one we live in, we cannot stop comparing ourselves, and for that we must measure ourselves with the competition, with the commercial sector to which we belong, or simply with past periods, this in order to verify that our company is generating profits and our financial objectives are being carried out, for this it is essential to use financial indicators that inform us about liquidity, debt, profitability, productivity, growth and business activity.
Nowadays, not only large companies must be aware of this, that is, SMEs in Mexico have little financial information, they do not have a department as such within their company and the administrator and / or owner of the company believes or think this is not important.
Small and Medium Enterprises in Mexico have great potential for development, since according to the most recent figures generated by the Ministry of the Economy, 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 that also generate and employ 72% of the economically active population, generating approximately 52% participation in the national Gross Domestic Product (GDP). Keeping companies classified as SMEs with a healthy financial level is very important for the country to improve its quality of life in general.
The above figures make us realize the importance of SMEs, however, these data are not sufficient evidence of their robustness. According to the study "SMEs and entrepreneurs" by Nacional Financiera, only 10% of companies with 10 years in the market are successful, 75% of new SMEs close after 2 years of operations, 50% bankruptcy after one year of activity, and 90% die before reaching their fifth birthday.
With all this information, it should be noted that the lack of knowledge in administration and finance, as well as the disorganization of the Mexican businessman, are the main factors that influence the failure of the smaller business units in the country. A total absence of an administrative system stands out, as well as an inadequate management of resources, in addition to its informality, lack of professionalism and scarcity of financial information, which causes that in its first years of life a SME goes bankrupt and does not go beyond of a company that closed due to lack of resources.
In this sense, the finance area becomes relevant in the daily operation of organizations. "Within the financial management of companies there are three fundamental decisions that must be made: investments, capital structure and dividend policy" (Rodríguez, 2005).
When thinking about an organization's investment decisions, it has traditionally been assumed that rational entrepreneurs are guided by their confidence in the efficiency of markets. However, what if markets are not as efficient as is often believed? What if entrepreneurs are not rational and their decisions respond to predictable biases in some way? It is the last question, the one that leads to a reexamination of some accepted ideas in traditional corporate finance.
This is why we say that it is too important for the owner of the company to have the basic knowledge of Finance and create a section just for this within their company, this in order to be able to interpret the financial statements and be able to have a better take of decisions because when we interpret the data of the financial statements we must make comparisons between the items related to each other, in the same statements on a given date or period, which makes us go deeper into what the company was and is now and helps us to correct any problems that may exist and to do so with enough time to avoid creating more expenses for the company.
On the other hand, having basic knowledge of finance would help us to know liquidity, that is, the solvency that you have to pay the commitments acquired by the company, this with the aim of preventing our company from going bankrupt due to some situation that arises. present and do not have the necessary resources to face it.
What is needed then to open an SME? This is the last question we focus on and where we can argue that the fundamental part of an SME is its creator and that it has knowledge in administration and finance, one for the control of your company and the other for its solvency, because when we think about growing we must create a solid base to be able to undertake and have what is necessary to face the circumstances that may arise, that is, SMEs must have a good administrator and a department focused on the finance area creating a team for decision making based on the financial reality of the company.
IV.- Conclusion
The majority of SMEs fail due to the lack of financial information, little concern and no occupation within this concept. On the other hand, companies that create a department dedicated to their finances manage to obtain more time to live and position themselves in the market supported by other factors but without forgetting the importance of company financing, hardly a company that is worries in your finances ends up failing.
In conclusion, finance is a fundamental part for the growth and development of new companies. SMEs represent a high level of income for the country and it is for that same reason that efforts should be made to promote knowledge of finances within the owners and / or administrators.
V.- References
- Crivellini, J. (September 05, 2011). Finanbolsa. Obtained from Finanbolsa: http://finanbolsa.com/2010/02/09/historia-de-las-finanzas/Gordillo, CA (June 28, 2013). Gestiopolis. Obtained from Gestiopolis: http://www.gestiopolis.com/finanzas-contaduria-2/importancia-de-las-finanzas-en-las-pymes-mexicanas.htmMateo, CL (February 20, 2014). EUMED. Obtained from EUMED: http://www.eumed.net/libros-gratis/2012b/1191/decision_inversion_pequena_empresa.html Myers, BR (1998). Fundamentals of business financing. Madrid: McGraw Hill. Secretary of Economy. (January 29, 2014). Secretary of economy. Obtained from Secretary of Economy:
