The route to success for any well established entrepreneur is financial literacy. Financial literacy is the gateway through which entrepreneurship is established and maintained over a long period of time.
Financial literacy is simply an understanding of how to make, spend, invest and save money as well as having the skills and ability to use financial resources to make decisions. These decisions include how to generate, invest, spend, and save money. In Africa today, business ideas are thought out, a cornucopia of them but only a few are utilized for operations in business. This is sequential to the issue of financial illiteracy.
According to the Organisation for Economic Cooperation and Development (OECD), in the absence of financial education, individuals and households “are more prone to indebtedness and bankruptcy.” This also goes for entrepreneurs, “lacking” financial literacy can lead to big problems in business.
Financial literacy is greatly misconstrued and well hidden in the clouds of entrepreneurial ignorance – dragging threats experienced in the course of a business which ultimately, lead to its death.
Why financial literacy should be taken serious is stringent to the fact that it guides entrepreneurs on opportunities, risks and threats to business and the proper timeframe for any action, putting value chain in check. It is critical that entrepreneurs understand the principles covering money matters, budgeting, financial planning and management.
This can be understood as the duty of an accountant. Right! But the entrepreneur is also an ‘accountant’, and his enterprise depends on his ability to optimally manage finance. He needs to master the financial concepts and decisions key to success.
Entrepreneurs are key players in the economy of a nation. Financial literacy is a channel towards business success, and entrepreneurship is germane to the creation of an economically viable nation.
There has been a tremendous evolution in the labour market. Digitalization, fintech, crowdfunding and other advancements in the tech world are spiralling entrepreneurs into a sort of models in the entire world. Digital technology has also enhanced access to financial knowledge.
A substantial number of successful entrepreneurs is an indication of the overall health of any economy, and financial literacy can aid in acquiring such laudable position for a nation.