Have you heard of the quote: “Financial education is more valuable than money?”
This is what Mac Duke, a value communication practitioner and marketing strategist, advises entrepreneurs who want to grow their business. These words are more relevant now that the pandemic has presented businesses with many challenges, from changes in customer demand to lags in the supply chain. In fact, did you know that a study from the Institute of Management Accountants found that nearly half of companies are prioritizing risk and finance management because of this? And so should you, of course. But to properly handle and plan your business’ finances, you need to have the right skills. Here are three of the most important ones:
Bookkeeping entails keeping a systematic record of all your financial transactions. This skill will allow you to track your business’ assets, liabilities, and equity at all times, which can help you make more informed financial decisions (like if you need a bank loan). To be successful at bookkeeping you will need to know how to write balance sheets (sometimes known as the “statement of financial position”), income statements, and cash flow statements, among other things. We’ve even included bookkeeping in our list entitled How to Give Your Business a Financial Health Check, so you should be the first thing you need to pick up.
“Accounting” is a multi-faceted term that refers to a set of skills that allow you to record and analyze financial statements pertaining to your businesses. For example, you need to know how to read income and cash flow statements, which will provide insight into your company’s profitability. There’s also a need to know a bit of math and practice some deductive reasoning, so you can make accurate predictions. You will also need to learn how to use accounting-related tech tools like Microsoft Excel, ERP software, analytics tools, and others.
3. Credit Building
There’s a lot about your business’ credit rating that will affect how well it operates. For example, your credit rating determines your company’s eligibility for many finance-related prospects, such as acquiring loans. It also doubles as a representation of your business’ trustworthiness with money, helping you attract investors. You will need to learn strategies that will allow you to steadily build credit, like managing your financial relationships with vendors and spreading out your bills, without wasting company resources (and, worst-case scenario, leading it to bankruptcy).
Building Your Financial Skills
Of course, learning all of the above skills will not only require a full understanding of your company’s resources but a ton of financial insight as well. Financial insight can be gained through many ways, such as taking short courses on the topic or reading information books like Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine by Mike Michalowicz. You may also hire a consultant or a trainer to personally teach you the processes. Or, if you have the time and budget, you can further your training through formal education. Fortunately, because of the continuous need for financial experts in business, many universities have created dedicated online courses that combine the two fields. Those who take Maryville University’s master’s in business administration are encouraged to pursue specialized fields like Accounting and Financial Services. This is in order to be able to apply these areas in a corporate world. The job market for those who undergo this tertiary education training is good, with many entering finance-related careers, such as financial analyst and financial manager. Likewise, Columbia University’s corporate finance course will teach you financial analytics and other skills that will allow you to manage your business’ funds by yourself.In summary, accounting, bookkeeping, and credit building are crucial skills every successful entrepreneur needs to mitigate risk and grow profit. Invest time and money to learn them; you can choose to self-study or receive guidance from an expert.