Hard but not impossible

 The month of September has turned out to be a month of returning to economic life. We can now go outside, with an 11 p.m. to 5 a.m. and all day on Sunday curfew and without distinction of sex which can result in more movement of the economy.

You notice more movement than there was previously, but not everything has opened yet, so an impact cannot be measured - yet (still, we have to wait for economic figures to be published by Government). In any case, if there is movement, it could be converted into employment, wealth, and in the end, it can give us an interesting end of the year.

But I would like to speak to entrepreneurs who are in serious trouble. Those that the pandemic knocked down, but who feel they can still revive. Those who do not want to give up. Those who do not want to lose years of working on a project. Let's see the problems that we can find:

Cash Flow: This will be the main problem that the pandemic leaves us. Recovering from this is not easy. Especially if there is only one owner. How much more would an entrepreneur be willing to invest in his company under a climate of uncertainty?

In this matter, the important thing is to know how much money you have to go ahead, and if you still want to go ahead with the project. Many businessmen/entrepreneurs would like to go ahead with the project that has cost them a lot of time and money to get where they are. But do you have any kind of chance to get ahead? Probably the best tool to use is to do a financial cash flow, which allows you to determine how much flow you need / will get the appropriate cash flow to move forward.

But to make cash flow decisions, we have to develop the next two items on the agenda.

Expenses: If you have commercial premises, it is most likely that maintaining the premises implies an extraordinary money outflow under this climate of uncertainty. What can be done?

The pandemic has taken us as far back as 2015. Having had to close operations for more than 5 months has cost the economy a lot. And while not all companies were affected, a large number of them were affected, and worst of all, they weren't prepared for something like this (nobody was). Those that were able to open halfway or keep operating "normally" have felt the impact of the quarantine and pandemic in one way or another, but those that could not do anything, for whatever reasons, have reached a point of no return.

Therefore, the first analysis that must be done is that of costs and expenses, which will determine the possibilities that the company will have to continue if it can cut costs and expenses.

It is not something easy, but it is not impossible either. Calculate how many employees you need under current conditions; this will substantially lower your payroll and benefits. How many people can you send to work from home? This will allow you to rent a smaller location or work without a physical location at all, and these savings translate into fewer expenses for utilities, cafeterias, etc. And you can sell the furniture and equipment or you can "lend" it to your employees to work at home.

Sales: Will there be the appropriate demand to open the business?

This is the one million question. Will we have demand? Will we continue to sell our products or services? Here you have two options. Either you conduct surveys, which may cost you some money, but have some effective decision-making, or we open very carefully and evaluate how much staff and inventory and branches we need to sell. An example is the banks, which have chosen to operate with a limited number of branches (except state banks, which for them there is no crisis), but they continue to provide the service (since most customers are using electronic online banking options that make branches obsolete). But this is not the option of all companies, and not all have to use the same formulas, the important thing is that you do something.

These formulas work for some companies. Others must make other decisions. For example, I can either sell or buy or merge. These are very interesting words, and actions. For this, you will need some financial help, since you need to do some kind of valuation, to get an idea of ​​how much your company or the company you want to acquire or with which you want to merge is worth.

If you are going to sell, the decision is based on the price they will want to pay you. Remember that we are in a buyer's market, as we are in an economic crisis. If you need to sell at this time, keep in mind that you will most likely receive somewhat less than what your business is worth, so you will have to decide to sell now or later. And it is obvious that, if you do not want to keep losing money, chances are that selling now is the best you can do.

 

If you are going to buy, you have several decisions to make. You have to choose what to buy. The main thing is to know something about the business you want to buy. The other important thing is that this business complements what you have at the moment or that your purchase makes sense. Remember the vertical and horizontal integrations, which make perfect sense.

Now, to merge, the main thing is that the business to merge brings you, customers, that you do not have, or that the current business complements you. Another important thing in mergers is to be able to merge the company in the right way, without affecting the operations of any of the companies to be merged. Here I also recommend help from professionals.

In purchase or merger, you have to make a valuation, to determine the merger or acquisition price. Again, remember that we are in a buyer's market, so we can get a good price on the company to buy or merge.

If none of this works, then, before closing the company think about entering the Panamanian Chapter 11, which, although it is not the same as the gringo, at least gives some hope to a company to reorganize itself before any creditor wants to seize it. Here you have to do a legal part and a financial restructuring. And obviously, you need legal and financial advisers.

And if there is nothing you can do, then sadly, there is no choice but to close. But exhaust all the options above, call consultants/advisers for help before making this decision. Do not feel that you have failed, on the contrary, many times you have to make difficult decisions that will have results later. And this is most likely the case. You have to cut the losses in the current business and look for new horizons.