Financial literacy is absolutely essential for entrepreneurs and business founders. Most entrepreneurs are aware of this, but as a survey by Intuit Canada shows, there is a big gap between what entrepreneurs should know about finance and what they really know.
At SKILLFIN LEARNING, we work with entrepreneurs and business owners from around the world. This gives us a ringside view of the start-up world around the world.
Here, we discuss the importance of business finance for entrepreneurs and why so many are lagging behind at this. Also, we tell you about our online course on finance for startup entrepreneurs and business founders.
Business Finance for Entrepreneurs – How Much Do They Really Know?
Entrepreneurs can be far more effective at growing their start-ups or businesses by having a better understanding of the basics of finance and accounting; something as simple or basic as knowing how to read a balance sheet.
Most entrepreneurs are from an engineering or science background, and do not have much of a training in finance.
In India, for example, there are literally thousands of new start-ups coming up every year. India already has the world’s third largest start-up ecosystem. However, the success rate of Indian start-ups continues to abysmal.
There are many reasons for this such as lack of financial planning and budgeting, making incorrect forecasts and mismanagement of capital or financial resources. The lack of financial capability or knowledge is particular acute in early stage companies or start-ups.
While entrepreneurs are very good at using technology, they fail to understand that business finance is more than just about managing the cash flow. It is about understanding what your numbers mean and how you can use them to grow your business.
5 Reasons Entrepreneurs Should Learn Finance
Reason #1: You are expected to know the basics of business finance.
You should know how much is coming in and how much is going out of the business, that’s the most basic thing. Your company’s ability to survive and thrive in this tough and highly competitive market, and raise capital will depend on your understanding or knowledge of business finance.
Reason #2: Financial management is critical to business’s prospects.
As an entrepreneur, if you are serious about raising capital, you should know how to manage your own money. If you don’t know how to manage your own money, you can’t be serious about managing somebody else’s money. That’s why a good understanding of finance and business accounting is important.
Reason #3: You won’t need to hire an in-house accounting staff.
As a business start-up owner, you probably cannot afford to hire a full-time accounting staff. You will have to manage the books and handle your business’s finances yourself. You should know how to use accounting software such as QuickBooks, for example.
Reason #4: You will be able to make better projections about the business based on financial data.
Being financially literate gives you complete control over your business. You will be able to derive a better understanding of your business and where it stands from reading balance sheets and profit and loss statements. This will help you make better decisions regarding the future direction of business.
Reason #5: You should be comfortable with using financial jargon in meetings and negotiations with bankers and investors.
As a business founder, you should know how to talk finance and be comfortable with using financial jargon in a conversation. You should be able to hold your own in discussions with banks, investors or private equity firms; otherwise you won’t be taken seriously by them. That’s why knowledge of business finance is so essential.
The future of your start-up or business will depend on how well you deploy, manage and leverage your capital or financial resources. A good place to start is to sign up for the online course on Finance for Startup Entrepreneurs and Business Founders from SKILLFIN LEARNING.
This course is designed for busy professionals or entrepreneurs and we teach you everything from the scratch. You will learn how to create a financial model for your business, identifying key value drivers and making financial projections for the growth of your business. Also, you will be given a thorough training in capital raising, business valuation and investor negotiations.
The online course will be conducted by Ashish, business and finance expert with 10 years of experience in this field. Ashish has worked with BlackRock and McKinsey in the past and advises corporate clients from around the word on business strategy and finance.
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