Need some business financial literacy? Start here

Business history is full of stories about accidental entrepreneurs who started with little or no business literacy.

Pete Cancro, the founder of Jersey Mike’s started his sub empire straight out of high school. Steve Jobs, Mark Zuckerberg, and Bill Gates dropped out of college to become entrepreneurs in their 20s.

Even though they all started with little business financial literacy, Cancro, Jobs, Zuckerburg, and Gates worked to build it a little more every day.

That’s the key: keep learning no matter where you are in your entrepreneurial journey. Today’s post does just that. It helps new entrepreneurs with basics and gives veteran business people health reminders.

Let’s go!

Start at the start

Let’s start with the basics. Namely, financial statements. These include income statements, balance sheets, and cash flow statements.

Most business owners know these, but many don’t know how to read them well. That’s a little like driving in a foreign country. You can stay on the road, but you can’t be confident because you aren’t sure what the signs say.

Without the ability to read and interpret financial statements, you miss the chance to analyze trends, make informed decisions, and identify strengths and weaknesses in your business.

Don’t be embarrassed if you find yourself in this situation, just click on the links above for a primer and keep practicing.

Once you have it down, you can start learning more about the next area.

Budgeting and Financial Planning

Every business needs a budget. Period.

If you aren’t doing one, it is time to start. There are plenty of online courses and community college programs, or you can reach out to a CPA for advice.

Just get it done because a well-structured budget serves as a financial roadmap, outlining income and expenses.

It also serves as the foundation for financial forecasting so you can set goals and secure financing.

That brings us to our next topic.

Financing Options

In today’s economy, there are lots of options for securing financing. The traditional loan route is still an option, but there are also microloans for smaller amounts of money.

On the technology side, crowdfunding and peer-to-peer lending are also available. Both of these financing options are usually done online through trusted platforms.

Your business may qualify for a grant, as well.

There are plenty of financing options and ways to track income, but there’s still one more area of business literacy you must understand.

Tax Strategy

Of all the areas in this post, tax strategy is arguably the most difficult to employ well. Due to changing tax laws and regulations, it’s a dynamic area and hard to track.

Also, it’s very misunderstood.

Even tax strategy fundamentals, like what kind of deductions you can take for your business, are often employed poorly or completely wrong.

That’s unfortunate because tax strategy can really save your business money.

So, it’s good to keep a CPA around to ensure you are employing your tax strategy effectively.

The Bottom Line

Business literacy is like any other language. The more you know, the better off you are. So, carve out an hour every week to study an area that you think can help your business now or in the near future. It could be the difference between success and failure.