Ultimate Guide: Financial Education for Entrepreneurs and Business Management

Financial education for entrepreneurs is one of the key pillars for the success of your own business. However, this subject is often ignored. And this is very, very dangerous indeed. It can lead many companies to bankruptcy. Therefore, we have separated here 11 mandatory and fundamental tips so that all beginning entrepreneurs work on each of them the right way. Thus, achieving great success in their entrepreneurial journeys. Everything in a practical and summarized way! You want to receive tips and information to set up your own business. So subscribe to this channel and stay on top of everything you need to know to open your own company.

What is Financial Education and why is it Vital?

For our tips to be very clear, first, it is necessary to understand what financial education is. Which basically represents a process of acquiring knowledge and skills focused on financial resource management and money. It empowers individuals to make conscious and efficient financial decisions, aiming to reach their financial goals in the short, medium, and long term. And with good financial education, entrepreneurs will be able to do a great job. Because it provides: conscious, solid, and responsible decision-making. Everything based on concrete information.

Furthermore, always with a very efficient and structured financial planning. Always with a comprehensive and deep view of available resources and future needs as well. Likewise, financial education ensures that entrepreneurs do not accumulate debt. Since it will allow them to have clarity of all the company’s finances and personal ones as well. As a result, they will be able to use resources in a responsible and conscious way. As well as controlling all costs and expenses effectively. Still, it will be possible to find opportunities that can bring great results to the business. Since stable financial control brings tranquility and clarity to develop promising plans. At the same time, with well-worked financial education, entrepreneurs will have a very solid base to work on good financial management of the company. As well as personal. And thus, have a very large and healthy emotional stability. Since financial issues will be well controlled and planned.

11 Practical Tips for the Success of your Own Business

With this in mind, let’s now go to our mandatory and very practical tips for having good entrepreneurial financial education. So, let’s go!

1. Separate Personal Finances from the Company

One thing is the company’s cash. Another is the entrepreneur’s personal wallet. This needs to be very clear and needs to be done. The financial health of your business cannot be mixed with your personal account. Separating them will allow you to have greater control over financial management, both business and personal.

2. Establish your Remuneration (Withdrawal/Salary)

Defining your remuneration or salary is something that will give you greater peace of mind in your work and in your personal life as well. However, it is necessary to be very consistent and have a lot of responsibility according to the financial capacity of your business. Many entrepreneurs end up making larger cash withdrawals than possible. And this is very negative for the financial health of your company. Therefore, have a lot of clarity in what you are doing at this moment. And here, there are alternatives such as making the withdrawal of money according to the profitability of the business. Or else, via pró-labore, which is widely used in entrepreneurship.

Basically, pró-labore is the remuneration of partners for their work in the company. In other words, it is how much the owners of the company receive according to the work or function performed. However, it is different from a salary. According to labor law, pró-labore differs from salary precisely because, on this remuneration, benefits such as FGTS, 13th salary, vacations, among others, are not mandatory. So, if you want to understand how pró-labore works, watch our video that explains this in a very practical way.

3. Define Real Objectives and Goals

Often, entrepreneurs dream big, but without planning how to get there. Even setting very unrealistic deadlines to reach their objectives. And this is a very common mistake. Therefore, after analyzing the current context, be very clear about where you want to go. Define objectives and goals according to your company. Be extremely sincere and use consistency as a base. For example:

• What revenue they intend to achieve;

• What are the limits for costs and expenses;

• How much the company is willing to perform new operational investments;

• What is the expected profit at the end of the period being planned.

Anyway, define all points according to your business. This step is very important because it will guide the financial and strategic matters of your business.

Organization and Financial Management Tools

4. Record and Categorize all Financial Transactions

Regardless of the amount spent or received, record all movements in the cash flow. This way, you can organize your finances properly, have access to each transaction whenever necessary, and avoid wasting money. Here, it is essential to separate each movement into distinct categories, which will facilitate the identification of the main types of expenses and income. And to simplify these records, it is recommended to invest in an efficient financial management platform. In fact, there are currently several management systems that help a lot in business management. Such as ERPs, which are management systems that allow easy, integrated, and reliable access to a company’s data.

5. Work on Cash Flow

Basically, cash flow is the control of money coming in and out of the company’s cash. In other words, what you receive and what you pay in your business. And for good cash flow control, it is necessary to ensure very detailed records of gains and spending, with great attention and organization. And monitor it constantly. That is why identifying fixed and variable costs, besides differentiating your costs and expenses, is very important. Because that is what the cash flow will monitor to help understand if the company’s financial health is good or not. Here, it is essential to understand when the money from a certain sale enters, in case a payment is made on credit or in installments. And the same goes for company purchases, which can also be paid in installments.

6. Working Capital: The Business Emergency Reserve

Having working capital represents a reserve of resources that will be used to supply the company’s financial needs over time. Like investing in opportunities or even paying eventual bills or debts. Or even solving eventual company emergencies. It is very important for having a little more financial tranquility.

Planning and Control for the Long Term

7. Control Costs and Expenses

Have all the costs and expenses of your business on the tip of your pen. All of them. This way, you will actually understand what your company is spending. As well as identifying what can be cut. But always considering not losing the quality of your business delivery. And understanding the difference between cost and expense is very important.

8. Work with Annual Budgets

Clarify what your annual budget will be for each area or need. Consider payment of bills, salaries, investment in new equipment, structure and processes, sales forecasting, financial reserves, anyway… Plan this monthly, have an overview of the year, and define what your annual budget will be. This is very important so that you have the company’s financial health very clear throughout the year. This way, your business will have a complete plan of how much it needs to invoice, what the limits for costs and expenses it needs to respect are, and what investments it needs to make. And, thus, you will be able to monitor your business results to know if you are on the right path or if you need to make some adjustment. That is what budgetary management is, that is what corporate financial planning provides.

9. Corporate Financial Planning

Financial planning consists of a projection of revenues and expenses for a certain period. In addition, it analyzes projected scenarios and establishes goals based on this information. In other words, it will be what points the guidelines so that the business is profitable, through a set of actions, tools, and controls that seek to understand, organize, and manage a company’s financial resources for the short, medium, and long term. That is, corporate financial planning has the main objective of ensuring that your company has enough cash to have a healthy life, manage to take advantage of opportunities or solve possible emergencies and, thus, grow constantly.

10. Monitor Constantly

Always monitor all movements of money coming in and out. Always study if your costs and expenses are consistent with the company’s revenue, profitability, and lucrativity. Furthermore, be very detailed and consistent at all moments. Even if an unnecessary cost or expense is very small, when added to others, it ends up becoming a very high amount. Therefore, always be rational when determining the really necessary costs and expenses. Sometimes, some managers act emotionally and consider some company expenses for personal use or simply by something intuitive, without base and study for it. And you can be sure: this is extremely dangerous for the financial health of your business, okay?

11. Study Always

Finally, study always. Understand which are the areas and subjects that you need to know or even improve. Studying is a fundamental pillar in entrepreneurship. In other words, seek to improve yourself and be in evolution always. This will bring you results both in the short, medium, and especially, in the long term. Thus, the chances of success for your business will be much greater and more realistic.

Conclusion and Summary of Tips

These were our tips on financial education for entrepreneurs. If you work them well every day, for sure, the chances of success for your own business are very large and real. However, they are not the only ones. Therefore, if there is any that we did not mention, write it here in the comments and share it with us! So? Did you like this video? So, if you can, click the “Thanks” button below and help our channel to continue producing and improving videos and content of this type for you.

And just to recap what we talked about:

1. Separate personal finances from the company (Essential for management CPC);

2. Establish your remuneration (Focus on Pró-labore and Profitability);

3. Define objectives and goals (Strategic planning);

4. Record and categorize all financial transactions (Use of ERP and Software);

5. Work on cash flow (Daily financial health);

6. Working capital (Reserve for growth);

7. Control costs and expenses (Operational efficiency);

8. Work with budgets (Budgetary management);

9. Financial planning (Vision of the future);

10. Monitor (Results analysis);

11. Study always (Entrepreneurial training).