A good business is like a good radio. For everything to work, several things need to happen at the same time. Perfect range, a sensitive antenna and crystal clear reception make a good radio. What about a business? It needs an idea, a product or service, financing, sales and… profitability – and then everything works!
Unfortunately, we do not live in a perfect world. Our favorite radio doesn’t always work ideally. There are many potential disturbances. It’s enough that the competition puts up a bigger antenna and takes over most of the signal. And if that wasn’t enough, it also disturbs the signal we are receiving.
The situation is similar in our business. There is a multitude of different disturbances that make everything work imperfectly. You get it, right? Here a supplier shortened their deadline for payment. A customer just went bankrupt and receivables are unpaid. Meanwhile, the exchange rate of a basic cost currency was strengthened significantly. And let us stop there for a bit.
When I was managing my first company, I did not fully understand that the dollar’s exchange rate is very important in the context of a company’s profitability. To the degree that it may even cause it to fail! It is enough that a bullish cost currency disturbs the profitability of our business. In retrospect, I now clearly see that the magnitude of potential problems grows the greater our ignorance in the area of currency risk and the greater our turnover.
Let us assume that we are operating at a 3-5% profit margin, where the dominant cost currency is the dollar and the sale currency is the Polish zloty. Sales are continuous and the USD/PLN exchange rate is constantly changing. Now let us imagine that sales are intensified. Orders reach a record high. Just an instant of inattention and the dollar goes up by 5% – and that’s a recipe for disaster. The profit margin just turned negative. Instead of making money, we have to pour money into our business.
I myself experienced several hundred thousand zlotys in losses… and the headache of how to deal with these disruptions at the company, how to turn them around. It turned out that banks or currency exchange firms are not interested in me knowing when the perfect time to exchange currency is. Quite the opposite – the greater my ignorance in this area, the more my “partners” profit off of me.
I decided to change this. I organized processes from the perspective of currency risk, input data into a spreadsheet, systematized the process – and additional profits followed. It took me about a year, but it was worth it.
Then it turned out that I am not alone with this and similar problems. My acquaintances, also exposed to currency risk, asked me to make my solution available when I told them about it. That made me wonder. Who knows how many small and medium enterprises could take advantage of my solution?
And then something happened that changed my thinking about business diametrically. I took part in the “Miracles of Capital” seminar led by Dr. Jeh Shyan Wong. The Singaporean investor showed how capital mechanisms work around the world and how to build a company the size of Facebook. I learned how we should approach such undertakings, both mentally and mathematically. And what happened?
It can be said that ExChord S.A. is a natural consequence of the path I have traveled. The Company is working on a solution that will allow business owners to avoid currency risk, and more importantly – save the time that we are currently dedicating to tracking exchange rates. Time that can be spent in many other ways to the benefit of one’s company and private life.
What is the greatest advantage of the solution that ExChord S.A. is proposing? Perhaps the fact that I have a practical approach. I can “walk a mile” in the shoes of entrepreneurs facing the same problems I once faced. I understand how important it is for every company that exchanges currency regularly to control currency exchange differences. Now, this is possible. Every business owner can take control over exchange differences and avoid currency risk. It’s enough to reach for the ExChord tool. It will make your business work perfectly again. Like a good radio.
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