Four Financial Skills Every Small Business Owner Should Have

Maybe you’ve never been to business school and maybe you don’t exactly have a head for numbers. None of that should prevent you from enthusiastically following your dream and launching your own business! However, it’s important to be aware of your limitations: All small business owners need some basic financial acumen, and if you lack it, then it’s in the best interest of your company for you to pursue some training and general financial education.

But what are the financial skills that small business owners need to master? If nothing else, pursue the following core competencies. Remember that the goal is not to become a walking calculator or a master of finance, but just to feel comfortable handling the basics of your business.

1. Reading financial statements. It is imperative to have a sense of where your business stands, financially—to know whether you’re bringing in a profit, what your margins are, or whether you’re actually operating at a loss. Thus, there is no way around it: Small business owners need to know how to read financial statements. This means knowing how to read a balance sheet and how to interpret key metrics—cash, accounts receivable, and so on.
2. Budgeting. Knowing where your company stands financially is the bedrock on which all these other skills rest—and once you’ve mastered it, you need to learn how to use that knowledge to plan for your company’s future, both in terms of short-term planning and long-term forecasting. Setting a company budget means being prudent in your use of assets and resources—not using money carelessly, even when you’re making a decent amount of it!
3. Bookkeeping. How well do you keep records of your company’s finances, including business expenses? Being an astute bookkeeper takes time and attention to detail, but it can yield big savings come tax time, while also keeping you out of the IRS’ crosshairs!
4. Invoicing. Related to bookkeeping, small business owners need to know how they can effectively get their customers to pay them—and keep records of those who have yet to pay. Invoicing can be tedious but it is imperative for businesses to make money.

To foster any of these skills could be a boon to the small business owner—so don’t delay! Enroll in one of our accounting courses today and hone your small business financial skills.