How to ensure the financial health of your startup

Financial health is fast becoming one of the biggest concerns for individuals – particularly in this current climate, which has presented much uncertainty. Being able to pay bills and debts on time and manage finances to support family and loved ones are all important factors that consumers and companies alike consider when managing their money. BBVA as a result is working with startups and retail banking customers to help them through the good times and the bad.

To discuss financial health, Gokhan Koca, head of BBVA’s SME Discipline, Juan José Divasson, executive director of Data Strategy and Science Innovation, and Luis Simoes, head of retail customers, shared some fascinating insights into the notion of corporate financial health.

From our perspective, it’s all about the financial ratios, which are profitability, liquidity and cash, among others

Small businesses understanding their financial health, or not, can be the difference between life and death. Being able to manage cash flow and payments keeps SMEs operational, though defining financial health beyond this can be difficult as various companies have different interpretations of the concept. Koca paints a picture of financial health from BBVA’s point of view as a bank. “From our perspective, it’s all about the financial ratios, which are profitability, liquidity and cash, among others,” he said. “However, when it comes to SMEs we usually point out some other criteria such as profit generation or forward planning, in order to simplify the communication”

The primary part of financial health for SMEs is for companies to be profitable, which can be hard for early-stage businesses. Many early-stage startups tend to rely on invested capital as they struggle to make profits early on.

A key component of companies staying on track is understanding whether their business is making net profit or not, says Koca. “This is extremely important and not easy for most of them, because their business and personal accounts are not separated” he explained, which means profitability can be very difficult to achieve and predict in the early years of operating.

Most of the small businesses have two-fold needs around funding

Divasson agrees that profitability is vital to the financial health of retail customers too. “For each one of our clients, financial health means different things: for some of them, it’s helping them meet their monthly obligations,” he said. “For others, it’s building savings to cover the unexpected, for another group it’s helping them invest their savings profitably, and for the wealthiest of them it’s optimising their investing portfolios.” In Divasson’s opinion, for retail customers strong financial health is when “money is not a concern and a source of worry” and the client is able to “meet financial obligations, and has saved enough to face most eventualities.”

Koca’s other point was that companies must plan for the future, which isn’t just having long-term goals but being more granular. Deciding on the immediate plans and the growth objectives will set the company off on good footing, and a lot of this is around the way these early-stage companies fund themselves. “Most of the small businesses have two-fold needs around funding,” reasons Koca. “The first one is working capital needs in order to help them run their day to day business. The second one is the investment loans, or funds for investment purposes.”


Having available working capital to pay imminent obligations, such as creditors and staff, is the most important short-term and ongoing responsibility of a small business. Having that capital readily available to be deployed where necessary is key to keeping the business running. The second is using capital to move the business forward and scale to become a larger, more successful company.

Koca explains that small businesses looking to move forward and grow require thorough scalability plans in place. “The objective for these micro and small businesses is to scale and grow, but they need a business plan covering the funding to fuel the growth”. Possessing capital to grow a business can often be forgotten as startups look to survive. Having a growth plan and factoring in the financial cost of that will help startups fundraise the correct amount for their runway. Financial institutions such as banks, private equity firms and ventures capitalists offer capital and advice on business planning. In this case, BBVA works with startups on financial planning to ensure they are secure in the short and long term with the potential to grow.

BBVA helps customers to easily have their day-to-day finances under control and manage them effortlessly

Luis Simoes feels that understanding is vital for both personal and professional financial planning. “We can emphasise financial knowledge, for example about the inflation, the interest rate and how to use them for savings,” he says. BBVA helps customers to optimise their financial health and manage their finances to reach their goals, including holistic advice and planning around targets such as savings and investments.

BBVA is supporting the financial health and awareness of its retail banking customers. The bank’s financial health value proposition articulates around two key objectives: control of the day to day finances and financial planning. Simoes explains that “BBVA helps customers to easily have their day-to-day finances under control and manage them effortlessly, for example informing clients about their monthly incomes and expenses or anticipating them any issue they need to be aware of”.

Financial planning helps customers to optimize their financial health and manage their finances to reach their goals, continues Simoes. “BBVA offers holistic advice and planning around goals such as savings, investments or achieving specific goals of any kind, from doing a trip to life changing plans such as acquiring a house or planning the retirement”.

Financial health of small businesses is vital to the vast majority of world economies. Those in these companies and larger financial institutions need to understand the unique challenges that these businesses face and also the individual goals to grow and be successful. Building a profitable company and having enough investment to sustain and scale the company is vital in ensuring the ultimate success of the business. BBVA is helping fintech startups through the Open Innovation programme to achieve their goals with support in technological collaboration, but also strategy and in financial planning and forecasting.

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