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What’s next for entrepreneurs after the quarantine?

August 10, 2020

12 min read

The opinions of the employees of You are personal.


What’s next for entrepreneurs after the quarantine?What’s next for entrepreneurs after the quarantine?

The end of the quarantine marks the beginning of a new phase in the country’s business: CUSTOMIZATION.

Adjustment because we don’t go back to what we were used to and have to adjust to new things.

We will return to an alien world, where everything will not work as it did before, where conditions will be different, in a world dominated by masks, outbreaks and outbreaks of the virus in different parts of the world. The economy will be a shadow of what it used to be before and we will have the same assurance that an outcast has on the high seas without knowing when to reach a deserted island or be rescued by a fishing boat.

I think that in this strange world the rules will change and it will not be an option to do business like we were used to.

Our new reality: little flow, little consumption and a lot of uncertainty

And how can it affect you that there is little flow, little consumption and a lot of uncertainty when you already open your business, toy store, hairdresser, restaurant, mattress factory, marketing agency or shoe factory? In a lot.

The pandemic left us no options, and the only thing we could do to prevent our healthcare system from collapsing was to resort to a general quarantine in which we decided to halt the economic activity of more than half of the industries and companies to face massive contagion.

This economic strike naturally had the consequence that more than half of all companies in the country had a turnover level of less than 20% and a similar level of collection. And of course, the vast majority of companies ran out of money to pay for expenses, payroll, suppliers, services, etc.

Some companies were able to borrow, just stop paying, lower wages, lay everyone off, and others went bankrupt.

I estimate that after two months of zero or almost no income and whether some of the expenses and obligations are payable, more than 60% of SMEs have their bank accounts at ZERO and have many, many debts.

And so we ended the quarantine chapter with debts and accounts to zero, but optimistic because we’re going to start and recover.

But I don’t think so … I think we haven’t seen the side effects of this quarantine. I don’t think we’re open and the thing is rosy, didn’t make it to see how you’re doing?

Perhaps the customers who owed you from the past few months will finally pay you and with that money you will start paying your suppliers to deliver goods and the economic wheel will start to turn? hopeful

Most likely, once your customers pay you what they owe you, you will pay your suppliers, right?

And if your customers don’t pay you, how would you pay your suppliers?

And your customers will only pay you if they can make and / or sell hard cash.

What if your customers’ customers don’t have any money either?

I think this is how the productive chain will be without flow. “If I want to pay you but you haven’t paid me, give me the opportunity to get paid and I’ll pay you,” and so history repeats itself link by link until we reach the end of the chain. the last link that is more used to paying in cash.

The consumer

So I think the more connections there are between what you are selling and the end user, the longer it will take for the money to reach your account.

Little flow makes this chain less honorable, less romantic, and with no desire to be crooks or thieves, your customers won’t pay you until they get paid and, and most likely, you will too, and this will be our new reality , NO MONEY short term.

Photo: Depositphotos.com

The solution could be a capital injection throughout the economy, before which the position of the current administration was very clear. NO.

The other alternative would then be to get resources through bank loans who are fearful of the uncertainty and the straightforward and quick answer for those applying for a loan is also a NO.

Another possible solution could be consumption, that the consumer buys and buys and buys and thus gradually the chain has resources again and the economic wheel is turning again.

Yes, in relation to that consumer … I’ll tell you:

Many Mexicans have been laid off, others have had to accept a pay cut, many others are locked in their homes without wanting to leave, and ALL, ALL Mexicans are concerned because we don’t know what the future will bring.

We don’t know if we will have a job, a company, a position or small jobs. We have no idea whether or not we will receive the same amount of money as we were used to next month.

And while some consumers have saved some money in those two months (by not having to spend more on transportation, food, or entertainment / distraction), they are unlikely to leave unless they know how much they will get in the following months save a lot or a little.

So the Mexican consumer is a consumer who is afraid to spend money with less money (monthly) and fewer consumers with jobs.

The uncertainty that surrounds us does not allow us to make medium- or long-term decisions. We cannot take out a loan with the assurance that we know exactly how we will pay it in two years.

The reality is we don’t know, and when we take out a loan, it’s not because we’re sure we can pay it, but because we take it, because we know we won’t survive if we get it not record.

The good news?

Well, if this is indeed our new reality, a world with little flow and little consumption, what should we do?

Here are some tips on how to prepare and move on:

Photo: Depositphotos.com

1. Get as close as possible to the end user. Not all products can be sold to the end user, but there may be intermediaries who limit your approach. Try to skip them as much as possible.

2. Get as close as possible to the direct manufacturer. The same thing happens on the other side. It is likely that you are shopping through a dealer today. There are many manufacturers out there ready to serve you directly at better prices than you can get right now.

3. Become an e-commerce expert. If you haven’t already, sell online through Mercado Libre, Amazon, Linio, Walmart, etc.

Ecommerce is here to stay, many people have had to experiment with an online sales page for the first time in their lives and these people will shop online again. This pandemic has served as a catalyst for online shopping to become more frequent than before and this trend is unlikely to subside.

The most important recommendation is that you use the channels you already have before opening your own online shop. Having your own store is not a bad idea, but it is time consuming and using any of the above channels can produce results a fraction of the time your own store can give you.

4. Sell on. When you have customers you haven’t paid, don’t stop selling them, sell them for cash and leave the debt for later.

Don’t become a moralistic person who gets angry if they don’t pay what they owe. At this point, you need to become a practical person and keep doing business. Selling to your customers who are cash criminals keeps the relationship you have with them alive, you help them keep working, and you help them find another option to replace you.

5. Open and export channels. If your product is for national consumption, open channels to export it, especially to the US.

The United States will return much stronger than Mexico. Americans have about $ 6 trillion invested in their economy, which means they won’t have a drop in chain flow or as drastic a drop in consumption as we do. Those who export will be the big winners in this pandemic.

6. Continue with the maximally reduced spending policy until your collection is normalized. If you have continued negotiating with your landlord, with suppliers, with employees, this is not over yet and you cannot afford to pay 100% of your landline until you are certain that you have at least guaranteed your income.

7. Motivate your employees to accept variable compensation. Not all employees agree to keep a lower than normal salary. A great way to motivate them to wear the shirt and make more money at the same time is to offer them a variable compensation system where you should consider factors such as collections, gross profit, and cost and cost reduction to compensate you will be surprised at what your employees are capable of with such motivation.

8. Look for new sellers for everything. Most likely, you can find out who is ready to give you a better rate and better loan terms.

In a world where there is less consumption and less flow, the rules are broken. It wouldn’t be strange if manufacturers were to sell directly without the need for a dealer.

9. Sale and purchase by shipment. Shipment means you have inventory ready to use, but it has not been billed. Only what you use is billed every week or every 15 days.

It’s a huge relief to your flow when you have your inventory ready to go without the pressure of paying for ALL at once. The same goes for your customers.

And contrary to what it seems, having an inventory on-the-ship is beneficial for everyone as you keep the chain going without putting huge pressure on large payments every 30 days. Several smaller payments become more manageable.

10. Change your commission structure. So that you pay commissions on the gross profit your sellers make instead of making them on the sale, and also on the profit accumulated rather than sold.

This simple strategy leads to one of the best results I’ve seen with my clients. Of course, the seller will not agree to a change in the rules, but in the medium and long term, the same seller can make more money and generate more money and cash flow for the company.

A seller who wins by selling, regardless of when it is charged or how much marginal contribution the sale generates, is a seller who doesn’t mind giving the maximum discount to a customer who clearly does not have the moral ability to be on time numbers.

One measured by collection and gross profit will look for better customers and ways to accommodate products that are more convenient for the business and ways to convince without having to offer a huge discount.

While the outlook for small and medium-sized businesses does not seem encouraging, those who make it up are their entrepreneurs who distinguish themselves through their courage and great ability to overcome adversity. and I am convinced that they will show it today more than ever.

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