There is no shortage of entrepreneurs in Australia who have a great idea or product, and the ability to create a “start-up” business to bring their creation to the market. According to a recent survey however, many of these fledgling businesses will not exist beyond 1 to 2 years, largely because their owners lack basic financial knowledge.
Early Stage Business Failures due to Lack of Financial Understanding
The survey also found that this lack of knowledge differed across a demographic spread, with Gen Y start-up owners having the least knowledge, Gen X having more and Baby Boomers knowing the most about basic finances. More than 500,000 Australians are involved in a start-up business, and many of the ideas and products have real potential. Unfortunately, this potential is not realised because they fail in the early stages, largely due to a lack of basic financial understanding.
We see this all too often in our capacity as accountants. At Charter Partners, we offer a range of client services for business operators, including Business Partner and Mentoring programs. It is often during our first meetings with new clients that we become aware of how ill-informed many of them are regarding basic financial and business skills.
Start with a Few Simple Strategies
We are not suggesting that every budding entrepreneur needs to take time out to get a business degree. There are many accounting firms like ours that can provide advice and services where needed. What they do need, however, is a few strategies to improve their financial knowledge while they continue running other aspects of their business.
Hire a Contract Bookkeeper and Ask Lots of Questions
One step in the early stages of their business would be to hire a professional bookkeeper on a contract basis to do the day-to-day account entries. During this process, they would be exposed to standard terminology and methods, and gain some understanding of the regular business cycle.
Take an Entry-Level Course
Training is another way to become financially savvy and there are all kinds of options available. If a start at a basic level is needed, we suggest contacting TAFE or a private training provider where entry level courses are generally available. Online training is an excellent option if spare time is an issue, as the course can be done from home.
Conferences, Short Courses and a Business Mentor
Conferences and short courses will also introduce the financial novice, not only to new terminology, but also to current business issues that could impact on their new enterprise. Becoming a member of the local Chamber of Commerce is also an excellent way to meet experienced business people who may be willing to act as mentors.
These are just a few suggestions. There are many other options available to help build the financial knowledge that is essential to the success of every entrepreneur.