However, many entrepreneurs have some experiences to share on the challenges that they faced when they were sourcing finance for their businesses. It’s amazing how common some of these challenges are and the reverse of it is equally amazing if you were to ask a group of financiers about the challenges they faced when lending.
Fortunately, for large corporates, they have a dedicated department that looks after the finances of the organisation, but for SMMEs, the entrepreneur or the “jockey” as I like to refer to them, is ultimately responsible for the overall activities of the business including financial matters. In all honesty, this is a specialised field much like your HR etc. The degree and level of understanding required in order for one to best deliver on their role, is huge. Successful entrepreneurs generally have a good understanding of the finances of their business. Many investors will be reluctant to plough funds into a business where the jockey does not know how the finances in the business work.
As a business owner, you should set aside time to discuss the finances of the business. This means at least once a month, a proper analysis of management accounts and within six months after year end, discussion of Annual Financial Statements. Keep in mind that the financials show the financial condition of a company at a given period.
Remember, financials are first and foremost for the jockey and not a third party. You should prompt your accountant to supply you with this information. If this financial information is never discussed at length to interpret it’s meaning, then it’s not worth the paper it’s written on. If you are in business or are aspiring to be in business and you have identified this aspect of business as your weakness, then this area should be your focus so that you can develop adequate skills. Seek outside assistance and also develop capacity in-house.