Unlocking the Power of Financial Literacy: Why Accounting is Essential for Business Success

Introduction

Accounting is the circulatory system of your business. It reveals how resources flow through your company, providing vital insights into its financial health. Contrary to popular belief, you don't need advanced math skills to excel at accounting. Basic addition and subtraction are sufficient to get started.

Monitoring your businesses financials closely is crucial.  Financial statements serve as an early warning system for changes within the business and highlight potential opportunities. Reliable accounting data is one of the strongest sources of information for making key business decisions. Without it, you're essentially flying blind. Relying solely on your bank account as an indicator of performance is a risky approach.

How to Improve Your Financial Literacy

1. Don't Be Afraid to Ask Questions: Many people struggle with financial literacy, so you're not alone if you find it challenging. Never hesitate to ask questions when speaking with an accountant. Most professionals are happy to share their knowledge and educate their clients. After all, who doesn't appreciate someone showing interest in their work?

2. Learn Step by Step: Accounting isn't something you can master in a day. It requires starting with the basics and building your knowledge over time. Tools like QuickBooks, Xero and Sage can help you with making entries, but understanding the sum of the parts requires some effort and learning.

3. Persistence: Personal story time. At age 24, I couldn't type efficiently. I used two fingers, and a boss once made me feel terrible about it. Determined to improve, I dedicated 20 minutes every night for three months to practicing with a program called Mavis Beacon. By the end of that period, my typing skills had improved significantly. The same approach can be applied to accounting. While the concepts might seem daunting at first, they become manageable with consistent practice. Investing time in learning accounting can be one of the most powerful personal investments you can make as a business owner.

4. Practice: There are many free resources available online if taking formal classes is not an option for you. Informal YouTube tutorials are a great first stop. Your chosen accounting software often comes pre-packaged with specific instructions and context on how to setup and start executing accounting and bookkeeping tasks. Check with your bank, startup incubator or accelerator and see if any of them are hosting in person financial literacy seminars with qualified professionals.

   Conclusion

   Improving your financial literacy is a journey, not a destination. By asking questions, learning step by step, and dedicating time to practice, you can develop a strong understanding of your business's financial health. This knowledge will empower you to make informed decisions, seize opportunities, and steer your business toward success. Don't underestimate the power of accounting—it could be the key to unlocking your business's full potential.

   We are always looking for investment opportunities with entrepreneurs working hard building new companies in traditional sectors.  As a part of working with us, we would be happy help set up a proper accounting process at your new business. We'd love to hear from you, and we invite you to submit your business plan or proposal to innovate@cofoundrgroup.ca. 

   Warm Regards,

   Richard Avila, CEO