When it comes to starting your own business, it can take a lot of time, money and effort. With that said, nearly 30 percent of startups fail because they run out of money. That’s one reason (out of many) for why it’s important for entrepreneurs to have a solid understanding of basic money management.
While most people are accustomed to being in control of their finances, things have changed over the years and the reality is that the financial world has become more complex. Entrepreneurs often struggle with the financial complexities of running a business. From filing taxes, managing payroll and more, it can be daunting to navigate the financial waters. In short: financial literacy is crucial to the success of any new business.
There are four key points that entrepreneurs need to know before they start out on their venture:
- How much capital will be needed: think critically about product development, marketing and administrative costs.
- Applying for business credit: only use loans that you know you be in a position to pay back. That is, use it to reduce costs or to enhance profits. Don’t use it for personal gain.
- Credit history: if you have a good history you are more likely to get business loans.
- Understanding financial statements: your statements are key data that can spell out success or failure for your venture.
Understanding just how important financial literacy is, not just for entrepreneurs, but individuals from all backgrounds, SkyCap Financial, one of Canada’s top lending companies, has been working to impart financial education to its customers. In fact, earlier this year, SkyCap Financial focused their efforts and created SkyCap University, a free educational course offered to their customers that provides useful instruction on basic money matters.
SkyCap University was developed from a need the company saw among their customers. In an effort to meet this need, SkyCap Financial focused on developing a fun and engaging program to teach basic tips and techniques to improve financial management.
With modules covering topics like budgeting, handling credit, coping with major financial events like marriage, buying a home or retirement, the SkyCap University course reviews and tests customers on key components of proper money management. As a reward, SkyCap Financial offers lower interest rates for those customers who finish the course and maintain a good payment history with the company.
The reality is that financial literacy should begin and be foundation before any business needs more capital. With a solid understanding of money management and the options open to them, entrepreneurs will be better equipped to launch a successful startup.