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Financial education is essential for entrepreneurs to run their businesses. Knowing how to implement a financial plan, manage cash flow, or resort to different financing channels is key to making better business decisions.
Entrepreneurship and startups
Entrepreneurial ventures go through different stages throughout their life cycle, from the pre-seed stage, when they begin to form their idea, to growth and expansion and even the “success” or divestment stage. At each stage of a startup, its goals and needs are different: it can raise more and more funding to expand its business, become scalable companies (i.e. companies that have already managed to raise a million dollars) and even become Monocytesachieving a valuation of over $1,000 million.
Financial education can make a difference at different stages of a company, from the moment it is founded to the launch of the product in the market and subsequent expansion. This term applied to business refers to all of these Knowledge and tools to run a business properly. Therefore, it can help entrepreneurs better assess the risks and opportunities that may arise and make informed and appropriate decisions to develop their venture.
Some of the most relevant concepts that entrepreneurs should learn as part of their financial education are financial plan, cash flow, or financing channels.
Financial plan
A financial plan is a basic document that defines the starting point for a business venture. It determines the financial capacity of the company and how it can meet the debt obligations acquired. The goal is Determine the company’s solvency, profitability and liquidity.
Financial flow
financial planning
A company can have a strategic vision for the future as long as it is able to meet its debts and short-term obligations. This ability is known as fluidity and can be measured. how? Using an indicator called the liquidity ratio.
It is also called the treasury flow or “cash flow”. Financial flow It shows the treasury outcome (i.e. net cash inflows and outflows) over a period of time as a result of a company’s economic activity. about him An indicator showing the company’s cash flow status. In addition, it provides potential entrepreneurs and investors a A clear snapshot of the company’s ability to generate liquidity. If properly analyzed and forecasted, a company can make decisions such as making new investments or looking for new ways of financing.
Financing methods
Know how and when Financing your project It is essential for any entrepreneur. In Spain, entrepreneurs are available with a series of subsidies and grants that provide financing to promote development and achieve business goals. Among them, the initiative stands out Activate startups, funded by the NextGenerationEU program and designed for open innovation and collaboration between startups and established companies in the sector. he is too Newtech programWhich grants subsidies of up to 70% of the cost of submitted projects.
Based on the Private financingEntrepreneurs can turn to a wide range of options, such as business angels or venture capital funds. In this context, bbva spark, Which accompanies high-growth companies, offers many financing solutions, including:
- ‘Project debt‘. Loans that combine debt and equity and prevent the entrepreneur’s contribution from falling too low.
- ‘growth loans‘. Loans provided in the advanced stages of a startup company to support its expansion and growth.
capital reinvestment
Investments
At the end of the first quarter of each year, it is customary for companies to hold general assemblies in which they present financial results and determine dividend distributions to shareholders. The latter has become an attraction for business owners, knowing what it is and how to invest it is one of the most frequently asked questions, which is why BBVA explains this payment and what can be done with the extra income.
When the project begins to generate profit, the entrepreneur must take into account the following: Reinvestment as a formula for continued growth. Financial education for entrepreneurs is essential to develop the company’s potential and achieve set goals. Innovation, digitization of processes, improving human talent, expanding the business, launching new products… are some of the improvements that are usually implemented in a business so that it continues to grow.
Tools to improve financial education for entrepreneurs
The Organization for Economic Co-operation and Development (OECD) refers to eFinancial education as a tool for Promoting economic growth, confidence and stabilityThis is in conjunction with regulating financial institutions and protecting consumers.
Entrepreneurs who want to improve their financial education have a wide range of tools at their disposal, such as Training courses, updated specialist information or useful specific knowledgeamong other things, to achieve this.
Free courses in financial education
OECD provides free Online lessons’ Promoting the development and learning of financial education among citizens in general and entrepreneurs in particular. Moreover, this organization offers Up-to-date information on consumption, international stock markets and income rates, Issues that may be of particular concern to some professionals.
Financial Education Plan 2022-2025
The Ministry of Economic Affairs and Digital Transformation cooperates with the Bank of Spain and the National Securities Market Authority (CNMV) in the field Financial Education Plan 2022-2025 Contributing to improving financial education among citizens. Through this initiative, Tools, skills and knowledge for people to make financial decisionsWhether on a personal or professional level.
Whatever the type of project or company, financial education for entrepreneurs is essential to properly run a business and achieve growth.
Podcast: Financial education, the key lever to be more sustainable
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