Entrepreneurs come from all kinds of backgrounds, including finance. Although many people think that you need to have a business degree to be successful in running your own business, this simply isn’t true. Your finance degree can help you in many different ways as you build your business.
Money is central in all businesses. Smart investments, keeping operating costs as low as possible, and ensuring that you are bringing in enough revenue to make a profit are the foundations of a self-sustaining enterprise. If you have a finance degree, then you already have a leg up in understanding and managing these critical foundations.
So, how can you put your finance degree to work and leverage it for entrepreneurial success? Here are just a few examples of how your degree can help you.
Financial Planning And Budgeting
Money is a limited resource in every business, even large corporations. While there are costs associated with running a business, regardless of the type or industry, financial planning and budgeting are essential to ensure that you are not overspending in some categories and underspending in others.
A finance degree should make it much easier to manage your business’s financial planning and budgeting. You will be able to create a realistic business plan, create solid projections, and allocate the funding you have for optimal growth.
Cash Flow Management
The initial financial planning and budgeting isn’t the only time when your finance degree will come in handy. You will use it all the time for cash flow management as your business operates and grows.
Sustainable businesses require constant financial oversight. As your revenue grows, you will have to adjust how you are using your cash flow to ensure sustainability. You will also need to be able to adjust accordingly if something goes wrong (and it will, at some point). Having the financial knowledge to adapt as needed can make a huge positive difference.
Investment Decisions
Whenever you spend money on your business, it should be an investment of some kind. If you hire someone new, buy a new piece of equipment, or subscribe to a software program, the goal is that whatever you are investing in will help you make more money. You can’t up-level your business without investments.
With this in mind, you need to be able to think critically about all investment decisions. Having a finance degree will help you be practical and consider the potential return on investment (ROI) versus the risks over everything else.
Smart investment choices can catapult your business to a new level of success, while bad investments can sink the ship— use your finance knowledge to make calculated investments.
Risk Management
There are risks whenever you make decisions within your business. For example, deciding to launch a new product line, switching suppliers, taking out a new line of credit to buy new equipment, or trying out new workflows all have their risks, as they have the potential to lose money for the business. Risks big and small are part of the fabric of business ownership.
For example, if you are making a product and you rely on one supplier, there is always the risk that something could happen that compromises that supplier’s ability to deliver. Having backup plans and other suppliers available could mitigate that risk and reduce the chances that you will be unable to provide the product for your customers.
You can’t start or grow a business without taking some risks. That is where risk management comes in. As someone with a finance background, you can use your knowledge to see where a risk might cost you money so that you can minimize those risks. All your risks should be calculated—and you should always have a backup plan in the wings.
Financial Analysis And Forecasting For Strategic Planning
Many business owners struggle with the financial aspects of running a business. As someone with a finance degree, however, this is likely where you will outperform the competition. Financial analysis and forecasting are key for strategic planning.
Understanding financial metrics and how to use them in goal-setting can help you grow your business more quickly and sustainably. You will be able to assess the financial health of your business yourself, draw out insights, and plan for the next quarter and beyond.
Optimized Tax Planning
Although your finance degree doesn’t necessarily make you an accountant, the knowledge you have gained through your education will help you to optimize your business’s tax planning for maximum savings. You will also be able to work closely with your accountant to identify any opportunities and tax strategies that could benefit your business.
Smart tax strategies will allow you to stay in compliance while allowing you to fuel your business’s long-term growth. Understanding this will help your small business to mature and develop through deductions and relevant tax breaks.
Obtaining Funding And Financing
Most people who provide startups with capital and invest in growing businesses are finance professionals themselves. While you can get funding from other sources, startups are often looking for venture capital (VC) investors or angel investors to provide them with a healthy source of startup capital.
Impressing VCs is a challenge, especially for entrepreneurs who have a good idea but very little business or finance knowledge. If you already have a finance degree, it can be that much easier to “speak their language” and create compelling proposals.
It is important to remember that there are many different funding options for startups. You should take some time to research and decide which funding sources make the most sense for your business before pursuing them.
Accurate Financial Reporting And Compliance
As a finance professional, you will understand the importance of financial reporting and compliance with local, state, and federal regulations. You should already have the knowledge to keep accurate financial records and reporting that will help to keep you and your business out of trouble with the law and the IRS.
Financial reporting is also important for transparency. Keeping accurate records and reports will build trust within your organization as it grows, which is important for a variety of reasons.
A Finance Degree Is A Valuable Asset
Getting a finance degree is very worthwhile if you intend to work in the business world or become an entrepreneur. These skills are extremely versatile and can translate well into any industry that interests you.
As an entrepreneur, you will have to wear many hats at first, but you don’t have to go it alone. Be open to getting professional advice from experts, especially when you are unsure about aspects of running your business. Investing in help from experts can be important for building a successful, sustainable, growing business.
