Basic Financial Management for Entrepreneurs


Entrepreneurship is more than just starting or doing a business, it is coming out with a new idea, venturing into it and laying the foundation for the business set up. Entrepreneurship is donning various hats and becoming the master of it. If your business is in the baby stage where funds are low but demand is high you may have to engage yourself deep into managing finance in a better way so that you have control as well as an idea of where your money is being spent or being blocked.

The initial capital to start up a venture and then having necessary funds to finance the working capital which is required for smooth running of business are the two most aspects of financial management for entrepreneurs.

Entrepreneurs should basically give impetus to their equity and debt capital. It is essential to repay debts on a timely basis without any delay in order to convince creditors of smooth functioning.

Further, fixed assets should be financed only out of long-term funds to avoid corrosion of capital funds. Equity capital is the costliest form of capital for any business. The demands of dividend and growth are sky high requiring entrepreneurs to give satisfactory quarter and year end results that generate returns for the shareholders. For businesses that are funded by venture capitalists it is necessary that their share of return is provided for promptly in order to sustain investments and capital.

Further expansion plans cannot be charted out with the help and support of venture capitalists. Entrepreneurs should also train themselves in managing their organization’s finance in order to ensure that the economic resources are best used. Few do’s for entrepreneurs are saving funds for the future expansion, to allocate funds to ensure job security of employees and the firm and few don’ts are over pricing, rapid expansion, paying more salary than what the work is worth for and such.