Economic growth is one of the main indicators in creating the welfare of a country’s society. We are in the age of start-ups and new ventures are opening every day. The key to national economic development is Economic independence. Entrepreneurs ought to be encouraged in every possible way as this will result in encouraging employment, productivity and economic growth. However, low numbers of entrepreneurs will only result in economic problems such as poverty, unemployment that could lead to inflation. In general, the quality of a country’s human resources will be analysed from the number of entrepreneurs who can develop and grow.
One of the main entrepreneurial challenges in business is lack of managerial skills. The ability to manage a business properly using effective strategies. This is more of the reason why entrepreneurs need to pass through a form of entrepreneurship education in order to enlighten them more on all of these areas. Therefore, financial literacy is a very important factor for entrepreneurs, thereby curbing the risk of entrepreneurial failures.
Why entrepreneurial skills?
Skills refer to the abilities and capacities of people who perform tasks demanded of them in a work environment. Skills can be generic, that is general transferable skills, computing, dealing with risk and uncertainty, or developing a new product or service. In order to increase or expand business profits, an entrepreneur needs to know the importance of skills and innovation. These skills vary from financial skills, management skills, marketing skills, communication and information skills, operational skills end the rest.
Entrepreneurial skills are fundamental and essential in order to build entrepreneurs on the courage to take risks, improve their business profits through creativity and innovation.
Why entrepreneurial education?
It takes a strong-willed desire, knowledge and skills to encourage someone who wants to become an entrepreneur. Entrepreneurial education therefore forms this entrepreneurship skills and helps in building new entrepreneurs. The primary aim of most entrepreneurial education is to develop some level of entrepreneurial competencies. Entrepreneurial competencies simply means a set of skills and ability that individuals possess and/or can acquire and improve to become proactive and to show the initiative spirit. It can also be defined as the ability to develop, organize and manage a business venture along with any of its risks. It includes key characteristics that should be possessed by a person in order to successfully run a new venture. These characteristics include social, managerial and networking competences.
In general, what is the importance of entrepreneurial education? It helps in creating awareness of existing business opportunities to the student, it encourages and builds entrepreneurial desires and it also adds knowledge and insight in the field of entrepreneurship.
Why financial literacy?
What is financial literacy? Financial literacy is the ability to understand and effectively apply various financial skills, including personal financial management, budgeting, and investing. It helps individuals become self-sufficient so that they can achieve financial stability. Financial literacy is very important for entrepreneurs because of the knowledge of budget management, procedures, credit management, and even the financial risks of business operations. Financial literacy can be obtained through educational institutions, with the aid of this financial literacy one can manage personal budget most especially in entrepreneurship. Therefore, Entrepreneurship education can teach financial literacy in managing the business to grow and develop.
Financial literacy even needs to be taught from primary school to higher institutions because it has to do with an entrepreneur making financial decisions. Managing and managing revenues and expenditures, making future financial planning, thereby making one wise and financially responsible.
Most entrepreneurs in Nigeria start business because they are technically good at something and crave the desire to make a lot of profit. They want to experience the freedom that comes with working for themselves. However, they often get carried away or occupied in everyday busy-ness rather than trying to educate themselves and become financially literate. As an entrepreneur, you need to put into consideration the following;
– Imagine if you understand what your financial reports actually mean.
– Imagine having knowledge on accurate bookkeeping which is necessary to produce financial reports.
— Imagine being able to focus on effective strategies to help your business grow.
With all of these considerations put into place, you will discover that attaining a level of financial literacy as a business owner or entrepreneur puts you in a better place, and would make a big difference to the success and growth of your business.
In general, entrepreneurship education has a greater influence on financial literacy in the grow aspect, awareness of business opportunities and can improve entrepreneurship skills. Simultaneously entrepreneurship education and financial literacy have a big influence on forming entrepreneurship skills that indicate an increase in entrepreneurial skills through understanding the balance sheet aspects, profit and loss statements, and cash flow and growing awareness of business opportunities. Here’s why;
The impact of financial literacy on entrepreneurs includes;
– A solid understanding of key financial reports
– A broad Knowledge of key accounting concepts
– A better understanding of the difference between cash flow and profit and how to review both
– An understanding of how to better manage both your debtors and creditors
– Technical know-how on monitoring income and expenses throughout the year
– Methods for saving time on administrative tasks that could be automated
– An understanding of the other information you need to know (e.g. stock, sales conversion, open to buy etc.)
In conclusion, financial literacy plays a significant role in improving business performance. Therefore, it is important that entrepreneurs need to improve their financial literacy skill in order to enhance and grow their business performance.