How to Be A Financially Literate Business Owner
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Running a business of any size requires an array of skills and knowledge, but financial literacy is the one skill that really paves the way for successful entrepreneurship. Financial literacy is the ability to understand your business’ finances, including best practices and financial concepts. All business owners need financial literacy in order to maintain transaction records, manage cash flow, create business plans, and handle taxes. With financial literacy comes the confidence to make important decisions, negotiate, and take on leadership roles.
At first, becoming financially literate can seem overwhelming. However, to help you empower yourself and your business, we’ve broken down the top 5 tips to help you become a financially literate business owner.
1. Build Up Resources
When you don’t know where to start, try looking for resources. Building up a list of resources that are relevant to your business is the first step towards financial literacy. Looking to experts can help you understand unfamiliar concepts and terminology in the financial world, as well as give you insight into how other business owners analyze their finances.
We recommend you check out a variety of books, podcasts, YouTube channels, webinars, and classes. Check out our list of business resources here.
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2. Network With Financial Professionals
Similar to our first tip, networking with financial professionals is an invaluable way to build your financial literacy. When you interact with professionals who have the same goals as you, you gain a support system of like-minded individuals who can offer you guidance, mentorship, and new perspectives that can help elevate your business to the next level.
3. Learn About Business Credit
Understanding business credit and your credit score are vital when you’re looking to take out a business loan. Not only will it help you learn how to improve your credit (if it needs improving) but it will also empower you to better negotiate interest rates and loans.
Lenders look to your business credit history, payment history, legal filings, and business history when making a decision to lend a small business loan. Speak with a business banker or professional to go over your financial history and learn how it affects your business today.
4. Assess Your Expenses
It’s important to assess your business’ expenses to understand where you can become more financially efficient. Keep track of your monthly expenses with a balance sheet, profit and loss statement, or a budgeting app. Is there a service that you’ve been paying for that you no longer need? Are your marketing efforts seeing a return on investment? Perhaps there’s a new and more cost-effective technology you can take advantage of. Keeping track of these monthly expenses is the key to making better financial decisions for your business.
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5. Hire a Financial Expert
Not everyone has the time to devote to completely working on their business’ finances. If you find yourself struggling to manage your finances, hire an expert to manage them for you. Although handling it all on your own may seem like it’ll save you money in the long run, making mistakes can make you accumulate serious fines.
Try hiring a financial consultant or a permanent employee to help you with your finances. Doing so can not only help out your business, but their expertise can help you become more financially literate in the process.
The Bottom Line
Financial literacy is the key to unlocking new business opportunities and making better decisions for your business. If you’re looking to improve your financial knowledge and gain a leg up in your industry, sign up for our upcoming webinar, How to Become a Financially Literate Business Owner.
To speak to our experts about your finances, book a consultation today! You can also take a look at our services page to see how we can help you understand your financial history better.
