Hiya! I do hope you have had a fantabulous week once again.
Straight to the point, today we would like to consider the top 6 tips regarding financial intelligence for an entrepreneur. This phrase ‘financial intelligence’ has become increasingly common in today’s business world. I will however limit this article to the term in the context of knowledge and skills gained in the areas of finance, accounting, risk management etc. Financial intelligence is actually a subset of business intelligence, but we will talk about business intelligence in the broader sense another day. Ok?
Again, the phrase financial intelligence has also been used sometimes to mean statutory and legal financial data and information gathering, or intelligence deployed by governments and some international bodies to combat financial crime, monitor economic activities etc. I’m not writing in that perspective in my article today. I’m simply talking about entrepreneurs’, business managers’ or employees’ knowledge about numbers and related issues. I’m taking about financial literacy. I’m talking about the language of business. Do you understand me? There is absolutely no way you can run a successful and sustainable enterprise without financial intelligence.
So, an entrepreneur who is financially intelligent knows for example how to properly price his products and services, the difference between capital (CAPEX) and operational expenditures (OPEX), budgeting and budget variances, the difference between profit and cash, what financial statements are and what they mean, key indicators of business health and growth, how to make profits in an enterprise, how to minimize business losses, how to management business in a sustainable way, how to steer clear of legal and statutory problems, how to invest wisely and maximize return on investment, and so on and so on. These are the things I’m talking about when I mention financial intelligence. Are you still with me?
Now, what are the top tips regarding financial intelligence for an entrepreneur?
- Money will not solve problems. It’s intelligence that will. The very first tip regarding financial intelligence is the fact that money will not solve for you all business problems. Rather, intelligence will. Don’t run up and down looking for whatever money you can lay your hands on, to keep on dumping into that problematic enterprise. Sit back and relax for a while to think soberly. Think intelligently like a real businessman. You are a co-creator with God and you have got to behave like one. Come on! Your game plan is to run a successful enterprise, create wealth and good return on your investment, create and deliver value to society, avoid and minimize risk etc in your entrepreneurial journey. Be smart!
- Money and wealth will soon disappear and never come back without financial intelligence. Entrepreneur, or Ms. /Madam Entrepreneur – whatever you like – as I know that some people are hopelessly gender sensitive. As for me, I prefer to look at humanity or rather treating every human as equal. That aside, what I’m saying is this. Without financial intelligence you cannot keep money, leave alone even making it in the first place. Some time back I said that if you gave say $10,000 capital individually to a number of people, you would certainly be surprised by the result of their investment and utilization of this money say over a period of ten years. Some will have absolutely nothing, and could be in debt. Others will have much surplus and some assets. Don’t you agree with me? If you are not financially intelligent, you can easily make millions of dollars, ruble, euros, cedis (or whatever valuable currency you like) disappear in a short while. You will not be able to keep those millions that you inherited from your father’s business empire. Haven’t you met some people who simply look blank and stare into space after being asked what happened to their vast money empire? I leave that to you.
- Financial intelligence involves knowledge of finance & accounting, investing, law, understanding the markets etc. One of the reasons why accountants are sought after and are highly priced is the fact that their training enables them to be financially intelligent. Additionally, they learn something about finance and accounting, something about investing, something about law, something about marketing, human resource, operations management, something about something etc. This is the reason why I simply love this profession. A well rounded, experienced and open minded accountant is a force to reckon with, and good value to your business Mr. Entrepreneur. Now, don’t start fighting your accountant because I said he is a force to reckon with. Ok? I’m simply saying that nobody can mess up with a business when there is a solid accountant there. So, another top tip regarding financial intelligence is that you need to be an all-rounder. Don’t limit yourself to only finance. In the interest of your enterprise, consider other elements of financial intelligence such as law, markets, the economy etc. This will certainly make you a successful entrepreneur.
- Financial intelligence can be learned both in the class and on the streets of business. My dear entrepreneur, don’t give me a lame excuse that you never went to school, never studied accounting and finance, don’t have a business degree blah blah blah. It’s never too late to start learning financial intelligence. You might even do better than a business college graduate. Don’t you agree with me? If you choose to do a course, that’s up to you. If you choose to learn on the streets of business, that’s still up to you. But never ignore it, because you will certainly pay a high price for this ignorance one day. Never believe in some myths that you must be born with this intelligence. So, get going and learning and stop giving excuses! The world is full of millions of very successful and financially intelligent entrepreneurs who never sat in class.
- If you can’t learn financial intelligence – pay for it. There are also millions of financially intelligent people out there who are not employed. Some of these learnt financial intelligence from school. Others from the streets. Yet others were born with some of these traits. Don’t blame the creator for being selective. Ok? He might not have given you a financial edge, but He gave you some edge and you need to identify this and make use of it. Period. Stop complaining. Everyone has a natural gift. So, my tip regarding financial intelligence here is this; if you can’t learn it, pay for it. Go out boldly and without shame. Look for that accountant or financially intelligent person wherever, and try to understand them. Let them throw some light into that enterprise. You might start seeing some things differently with their help. You never know. And please, don’t despise them because you are employing them. Ok? They may not be entrepreneurs like you for various reasons. But if you think you know it all, proceed but don’t cry! Stand like a real man when trouble comes because you ignored basic financial principles in your business.
- Blend financial intelligence with good habits and a positive attitude. Now, beyond financial intelligence, you need good habits and attitude to be a successful entrepreneur. This is my last tip today regarding financial intelligence for an entrepreneur. These are interconnected. Financial intelligence with a bad habit and attitude simply generate disaster. It is a positive attitude that will make you appreciate financial intelligence, and follow its principles when advised. It is a positive attitude that will make you learn and utilize financial intelligence. It is practicing good habits that blend with financial intelligence, which makes you a good business owner or entrepreneur. Arrogance will not give you success. To emphasize this point, I leave you with this small exercise. Try and name a few businesses or entrepreneurs in your area who failed in their businesses because they simply ignored financial advice. There are literally millions of these around the world. If you really want to do a successful business while learning along the way, try and find out!
In conclusion, today we have looked at the top 6 tips regarding financial intelligence for an entrepreneur. You might have your top tips. No worries. You can go ahead and list them or write about them. The great and famous African writer Chinua Achebe once said, I quote, ‘If you don’t like someone’s story, write your own’. I close it right here.
With all the best wishes, and till then,
The Wise Entrepreneur