I see many companies from the inside and my impression is that things are recovering reasonably well. Many former students want to share their project with a teacher whom they trust will not divulge it. The Covid led to rethink products, processes, markets and find ideas that can improve their companies.
A general problem is that surviving the break that Covid implied, with ERTES and similar inventions, but without laying off employees, has led them to increase their indebtedness. If sales are rising now, money is needed to finance them and the banks’ response is that they cannot lend more. With negotiations, solid guarantees, agreements with clients, progress is being made, but the expert ministers and those responsible at the European level tell us that there is no risk of significant inflation, that is, by putting a little more money on the market we can achieve renewal, innovation, jobs and economic joy, things we need.
As soon as this is fixed, entrepreneurs have to take a business management course or, if they have already done so, review it. Above all, knowing well what the company’s balance sheet, the income statement and the cash flow are. Senior managers need to carry these numbers in their brains and be able to see the impact of any new decision on these three things: “Sir, it looks like we have excellent prospects of selling our products in China and Southeast Asia.” , tell me the commercials who know that and who were there recently. “We would have to open an office there with a warehouse”, a person they met has thought, and they think they would have to hire him. “How much do we have to put up for all of this?” “They would not exceed 2 or 3 million.” “But where do we have them? Haven’t you seen what it costs us to cover the sales we have? How do we explain that we have to invest money that may take 2 or 3 years to produce results? “Sir, but if we don’t take advantage of that opportunity, our German competitors will keep it and although we beat them in price with the same quality, if they arrive first it won’t be easy for us to enter.”
A good bank that analyzed its clients well would understand all this and would put the funds for their advancement. But it seems that the banks have little interest in knowing their clients and discussing their investments with them to assess their support. Banks want to close branches, lay off employees and move banking online. Probably customers like those of that company can pay 1% more interest (or more). They need the funds but they are going to get a good return on them.
Many of the companies exist because in their day banks or other investors understood that the entrepreneurs who launched them or those who started new activities (opening new markets, launching new products, buying a company, expanding their factory) were going in the right direction, the they had discussed with them and even encouraged them. But it seems that banks will no longer be like that. This opens an opportunity that in some cases is taken advantage of by funds from entrepreneurs for whom things have gone well. They set up a fund that invests instead of lending and takes part of the shares. With your investment, companies can carry out their projects. The sad thing is that a few years later the investor wants to recover what he put in and a plus and the solution is to sell the company. There are ways to reach arrangements, with the entrepreneur keeping the majority and the businessman being replaced by a company that sees continuity in its investment in the project. But if we are going to be successful entrepreneurs, let’s get the balance sheet, the income statement and the cash flow into our heads and take care of the three things.
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