Financial Literacy for Entrepreneurs
Micro, Small, and Medium Enterprises’ (MSMEs) role in the broader economic environment should not be underestimated.
It is crucial to emphasise that the entrepreneurs and owner-manager of every MSME need to identify, assess and implement fundamental financial decisions for their business.
Typically, daily financial decisionmaking processes in a smaller enterprise are done by owner-managers.
Lack of time, resources, and expertise regarding legislative, tax, and financing requirements could hamper their external funding access.
Access to funding is fundamental for every business. MSME ownermanagers who are better equipped with knowledge and understanding of external financing options do have an advantage.
The future of MSMEs’ funding is based on rapid developments in technology.
Entrepreneurs need to take on board the importance of financial and non-financial data, which investors and lenders increasingly use for assessing business-specific risk and overall exposure to the market risk.
Thus, financial, tax, accounting, and business digital footprints data give access to more in-depth information to work with when analyzing MSMEs’ risk exposures. Therefore, owner-managers who are better equipped with knowledge and understanding of investors’ financial arrangements, traditional banks, and alternative finance providers such as FinTechs, NeoBanks, and BigTechs, will have an advantage.
Younger generations of future entrepreneurs, who are attending primary and high schools, need to be introduced to basic financial literacy and tax education, making them better prepared to make wellinformed and effective decisions when starting their business.
This is especially important when the younger generation is exposed to new employment and business opportunities in the so-called “sharing economy,” with numerous online platforms, financial products, and services.
Close collaboration between higher education, K-12, and MSMEs could access the latest groundbreaking research studies, which could potentially prop up ownermanagers financial literacy, business growth, and innovation.
It could mean bringing new business ideas to life for start-up businesses, as any business venture’s success depends, to a large extent, on how owner-managers source and allocate funds.
The labour force participation is expected to grow considerably, which means that people will have a career that lasts for 50-60 years.
Further, many current job responsibilities will be fully automated in the future.
As a result, the future workforce will require a different skill-set.
As a result, government policies worldwide should be aligned in promoting an economic environment in which MSME, higher education, and K-12 sectors foster improved collaboration and engagement in promoting the importance of the finance-structured discovery process and the overall financial literacy entrepreneurs, start-ups, and MSMEs.
Council