PANAL ed-tech (pesos)

With more than 90% of entrepreneurs in Colombia lacking financial literacy there is no surprise that the primary factor that leads to business failure in the region is financial matters. Pesos is an educational interface in which entrepreneurs, besides building a financial plan step-by-step and rising their financial literacy, are able to assess their startups health through financial ratios and take better decisions. Additionally, it recommends the ideal amount and credit installments that entrepreneurs should be asking for and matches the startups with all the financial alternatives available to them so that they can obtain funding. By scaling it properly it could allow any entrepreneur to identify on time insufficient income to survive, excessive operating expenses and consequences of delayed client payments which could lead to poor money management. Empowering entrepreneurs to own their startups´ numbers and optimizing their funding search could represent a significant decrement in failure entrepreneurial rates.

The problem that we are trying to solve within the inclusive entrepreneurship challenge is the 51% of small business´ discontinuance rates that are cause by financial factors and lack of profitability. This represents 35k+ annual business closures and with an average of 7 employees per company we are referring to 245,000 layoffs per year only in Colombia. Globally we are speaking of almost 4 million companies that close each year due to financial matters and 28 million layoffs. Research already shows that with financial education the probability of aborting a startup drops by 30% and that financial literate entrepreneurs are almost always successful at raising funds. Unfortunately, the majority of entrepreneurs lack financial education and even though they are working more than 40 hours per week in their startups they are not investing time in acquiring this education. Reality is that finance is everything but fun, it uses difficult terms and concepts, it involves messy math and it makes you take a hard look at your life and the disaster choices you made. If this wasn´t enough it´s normally deliver through an intimidating stranger in a suit.

Pesos is an online financial plan builder, like the WIX.com for financial projections. It allows any entrepreneur to create their financial projections without any previous knowledge in finance or accounting by building on information that they already know of their company.   

It is better than WIX.com because, besides the practical exercises to raise entrepreneurs´ financial literacy, it assesses the financial health of the business by comparing its financial ratios with its industry standards allowing entrepreneurs to take educated decisions.

Additionally, it has a financing feature that matches startups with all the financial alternatives available to them in Colombia so that entrepreneurs can obtain funding. Based on the startups’ financial projections, the software recommends the ideal amount and credit installments that the entrepreneurs should be asking for. Then, using that information plus the startups’ industry, growth plans and financial history, the software provides a financial institutions’ comparison chart with the specific alternatives that apply to the entrepreneur’s business, and indicates how each one of them would affect the company’s profitability. In this way, we guarantee that users not only find the funds, but also find the right amount and the best financial product for their specific case.

Our target population are curious, tech-savy small business owners and entrepreneurs between 25-45 years old, who do not have a formal financial education. They are either starting a business or are already running one but are struggling to keep their projects alive due to financial matters. These include but are not limited to facing insufficient income to survive, not finding financial alternatives, excessive operating costs, delayed client payments and poor money management. In order to understand the entrepreneurs´ needs, we offer a free layer of our software to educational institutions to be use in entrepreneurship classes in exchange of allowing us to make focus groups at the end of the term. Moreover, we offer financial conferences and office hours to advise business owners at the chamber of commerce getting the chance to hear their needs from firsthand.  The solution will address business owners’ needs by educating them while building their financial projections. Once users receive and understand their company´s financial assessment they are able to set a route map to reach their goals and take better management decisions improving their probabilities of succeeding.