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On this occasion we will make recommendations to managers or owners of small and medium-sized enterprises (SMEs) based on macroeconomic parameters.

As is customary, before starting our recommendations we will make some basic suggestions based on your economic activity. It is a priority as manager of an SME to know its competitive advantage. Competitive advantage is understood to be those qualities that your company has that gives it an advantage over its competitors in the sector: lower operating costs than its competition, strategic location, efficient customer loyalty, patents or exclusivity permits, etc. If you don’t have it, you shouldn’t read this article. Spend your efforts looking for these perks or an opportunity buyer. The less time you waste competing without advantages, the more likely you are to succeed in your financial learning.

As an administrator or owner of an SME, it is very important to know which financial information and macroeconomic indicators are most relevant: interbank rate, monetary policy, assets and liabilities; price of hydrocarbons; government incentives and tax policies for related sectors; exchange rate; macroeconomic growth; CPI and inflation. There are, of course, other variables that could be considered important outside of those already mentioned, but if you stay informed of these, you will be fine. As we have already said, fluctuations in macroeconomic variables could demand changes in the daily life of your business such as: purchases, inventory rotation, refinancing of your debts, current assets, target market, etc. Seek professional advice.

Let us begin. “BCRD informs that the CPI for the month of April registered a variation of -0.09%”. This means that if your business is to sell products, you should start lowering your inventory turnover to a manageable minimum. It is time to renegotiate with your local suppliers in all aspects. Use the liquidity of your inventory in reducing your payment times to suppliers in order to increase your benefits for discounts for prompt payment. Do not increase your retail prices to stay competitive even if it represents a reduction in your profit margin; look for compensatory alternatives based on reduction of operating costs.

Let’s see this other statement. “The economy registered a growth of 7.0% at the end of 2015”. If your company showed a decrease in 2015, do not base these results on excuses. You simply failed to capitalize on the growth of the economy last year, and this should tell you something about our first recommendation on “competitive advantage.” If this scenario is yours, expect even worse results for 2016 and consequently the downward restructuring of personnel accompanied by the cessation of new hires is the way to go. Reorganize your sales team focusing on clients directly or indirectly related to growing parts of the economy and outside those clients associated with decreasing sectors. Reformulate your incentive program based on the previous target market.

As you have seen, macroeconomic information matters in your company. Make sure you are taking action.