• Financial Skills for Entrepreneurs

    Owning and running a business is a dream come true, but it takes more than just passion and vision to keep it afloat. Essentially, businesses need to make a profit. A study by the U.S. Bank found that poor financial management and little to no understanding of cash flow cause small businesses to fail, 82% of the time.

    Don’t fall into the same trap. Knowing how to manage your finances prevents losses and fosters business growth, which leads to success. Below is a list of financial skills that every entrepreneur should master if they want their startups to thrive in the long run.

    Goal Setting

    Although generating higher revenue is an obvious primary goal, the work doesn’t stop there. Start by setting goals that follow the abbreviation SMART (Specific, Measurable, Achievable, Realistic, and Time-Bound). Financial goals should have definite results attainable with the right tools and resources within a reasonable timeframe. There is a 78% chance a business won’t survive due to a lack of a well-developed business plan.

    Revenue and Expenses Tracking

    If you’re not tracking your business revenue and expenses properly, you don’t have a clear picture of how well your business is performing. You won’t know whether your products and services are even profitable. Without an accurate report of your finances, you might be oblivious to the fact that you could be overspending or losing money and how that affects your bottom line.

    It is advisable to hire an accountant or read up on business bookkeeping to make sure that your finances stay on track.

    Wise Budgeting and Spending

    A complete documentation of your finances helps you make well-informed decisions on budget and expenses. Since you know exactly how much money is going into and out of your business, you can allocate your budget accordingly. You may consider purchasing new equipment to streamline the production process, paying for company-required training, or giving your employees a raise. Money put in the right places will positively impact productivity and morale.

    Credit Mindfulness

    At some point, you will need financial assistance through loans to sustain your business. Your credit rating is an indicator that lenders and investors look at when determining your eligibility for financing. A credit score represents your financial responsibility, so it’s important to maintain a strong rating.

    Startups without an established financial history need more time to build credit. If you’re a first-time entrepreneur, just trust the process. Build your credit by making smart purchases and paying dues on time.

    Networking and Business Pitching

    Selling equity is another way to sustain your business. You need to convince investors and strategic partners that your business is worth investing in. To do this, you must make mutually beneficial connections and pitch your ideas in a concise but memorable manner. These can be considered social skills, but they have a direct effect on your finances.

    Perceptive Investing

    On top of finding investors to share your equity, you should know how to invest in other profitable ventures as well. Diversify your profile by putting your money in different stocks or sectors. If you don’t have that much to spare, investing in just one other business with potential is a great start. You can also explore investing in low-risk investments such as gold or real estate.

    Financial Literacy

    You don’t have to be an expert to be able to manage your finances effectively. What matters is that you are always open to learning and seeking help. Equip yourself with knowledge by accessing free online resources like articles, forums, and websites that discuss financial management. Ask the right questions and consult professionals when you become stuck and uncertain. Financial savviness starts with your commitment to self-improvement and education.

    Unparalleled Business Acumen

    The financial aspects of entrepreneurship can be intimidating. One wrong financial decision could spell disaster to the business you have envisioned for so long. Fortunately, there are plenty of resources and mentors that you can lean on when the going gets tough.

    As an award-winning entrepreneur, I have extensive experience in business planning, project development, and revenue and profitability growth. I overcame the challenges that startups face. I would love to impart my wisdom and help you gain the financial skills you need to succeed.

    Contact me at [email protected] to learn more about all the different skills an entrepreneur needs.