Financial Literacy for Small Businesses
If your financial literacy is a bit shaky, you’re in good company. Approximately 40% of all small business owners surveyed report that they don’t truly understand their company’s financials, even after running their business for years.
Managing financials faithfully and accurately offers many benefits to you as a small business owner. Having a solid working knowledge of bookkeeping, projections, financial statements, reporting and financing can help you make sound business decisions. It is one of the main ways to gauge your success as a business owner and tells you if you are making a profit. Financial management can also help you decide what you can afford in terms of new investments in employees, equipment and inventory.
But that’s just for starters. Mastering financials provides you with the tools you need to plan for your business long term, including diversifying your product lines, reaching new markets and adjusting pricing for maximum competitiveness and profits. It can also help you control costs, further increasing revenue while significantly reducing overhead.
Suppose your business requires financing down the road to fuel expansion or bridge difficult times. In that case, sound financial management will help you document your need for a loan and help you qualify for a better loan at more favorable rates because your lender knows you understand what you’re getting into
This is what this series of modules is all about. Developed initially by the Small Business Administration and the Financial Deposit Insurance Corporation (FDIC), we’ve added the sage advice from business owners who have been in your shoes.
Using this Guide
You probably don’t need to go through the entire series from start to finish. You can poke around here and there to pick up tips and skills related to specific aspects of small business finances. If you are new to the idea of business finance, you may want to start and the beginning and work your way through the modules. Some of the skills and terms mentioned in earlier modules are referenced later on.
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These training materials are intended as general guidance only and may or may not apply to a particular situation based on the circumstances. The materials do not create any legal rights or impose any legally binding requirements or obligations on the Federal Deposit Insurance Corporation (FDIC), U.S. Small Business Administration (SBA) and the Washington State Department of Commerce.
The FDIC, SBA and Commerce make no claims or guarantees regarding the accuracy or timeliness of this information and material. The content of this training material is not designed or intended to provide authoritative financial, accounting, investment, legal or other professional advice which may be reasonably relied on by its readers. If expert assistance in any of these areas is required, the services of a qualified professional should be sought.
Reference to any specific commercial product, process, or service by trade name, trademark, manufacture, or otherwise does not constitute an endorsement, a recommendation, or a preference by the FDIC, SBA or Department of Commerce.