Pedro the consultant

I have begun doing some business advising with one of my counterpart teachers, Francis.  She is a seamstress and makes school uniforms and various articles of clothing for people in my town.  Even though Francis is in her final semester in undergraduate studies for marketing (she already holds a biology degree) she has not applied any of her knowledge to her own business.  Her enterprise uses zero marketing (not even a sign that says she’s a seamstress), accounting (she estimates her costs and prices) or planning (no steps to take in the future).  Although this is not surprising as it is the usual in Nicaragua, it seems silly not to use her new skills to help grow her business.  Therefore, I’ve started helping Francis put this knowledge in action.  Yesterday we discussed supply and demand for her products.  In general, Francis has more demand than she can handle since the business is comprised of only her and her aging mother.  So we came up with three potential solutions: increase production by hiring an employee or buying an industrial grade machine; or decrease demand by increasing her prices.  While this all seems fairly basic, it is difficult to make a decision about one’s business and measure the success of it without any sort of performance indicators.  Therefore, bring on the accounting!  We created statement of cash flows in Excel to monitor the income and expenses of Francis’ business overtime.  (For those of you who think financial statements are a different language, it is a spreadsheet that includes the date, description of transaction, starting balance, money entering or leaving and ending balance.)  I even made it fancy by including formulas to automatically do the mathematics so all she has to do is enter the numbers (are you proud mom??).

I’m going to meet with her next week to evaluate how she is spending her money and dig deeper into, yup you guessed it, fixed and variable costs!  How exciting!