To get a business up and running, there are many financial skill sets required: auditors, controllers, tax experts, and money raisers. Money raisers persuade banks and investors to advance funding, while controllers project how changes within the business will affect costs and cash flow. Auditors measure expenditures to monitor company results and reward positive employee behaviors, while tax experts use the intricacies of the Internal Revenue Code to prepare proper paperwork and minimize tax bills.
Although larger organizations may be capable of paying for a financial department, aspiring entrepreneurs should work to acquire the necessary financial skills and should continually practice making difficult financial decisions. Throughout their entire careers, entrepreneurs will face many different economic issues and questions. Therefore, it becomes more apparent that entrepreneurs should invest their time into learning financial skill sets, in the beginning, to save themselves money in the long run.
Financial success with a business comes as a result of many different factors. While time will help a budding entrepreneur come to understand the many diverse aspects of the financial sector, there are three finance skills that aspiring entrepreneurs should focus on at the start to set their business up for future success: borrowing, budgeting, and investing.
- Borrowing- Some startups have investors right off the bat, whereas other startups go years without. If your case is the latter, there are still options to look into. The first option would be to sell equity in your company for capital, but if you aren’t looking for partners, this isn’t the path for you. The second option would then be to take out a working capital loan. This will allow you to make purchases, strategically market and advertise and keep the business running until more profit is made. It is essential to have the financial understanding when borrowing, however, so that you choose the right loan and lender for your business.
- Budgeting- Without budgeting, a business is guaranteed to fail (unless funds are endless). It is imperative to the health of a company that records are kept, future expenses are estimated, and funds are designated for bills and taxes. The most successful companies are ones that carefully track where their money is coming from and going into. Review the budget, margins, and expenditures quarterly to protect the company and revenue.
- Investing- A huge part of creating a successful business is knowing how to spend and grow your money. Within your budget, money should be set aside to not only invest in your own company, but also for investing in other products and companies. Investment recommendations for entrepreneurs often revolve around lower-risk investments, such as real estate or gold.