Financial Management in SMEs
Dear Participants
I welcome you to this discussion on financial management in youth enterprises. As we start our discussion, consider this question. Why should youth entrepreneurs learn about financial management? Share your views on this topic. Tell us about your experiences in delivering this kind of training and any challenges you may have faced while delivering such training. I wish you all a great discussion.--nkl 18:12, 22 February 2011 (UTC)
Thank you Moderator Naomy, Financial management is about planning income and expenditure, and making decisions that will enable one to survive financially. As future leaders who will later take over the mantle of leadership, I feel the youth entrepreneurs should learn about financial management. Some of the advantages the youth entrepreneurs stand to benefit is that, it prepares them to take up highly responsible positions in life and in organisations. As entrepreneurs practicing such a thing, they become role models to the younger ones. It will also make them spend wisely and judiciously.
In my experience as an educationist, I encourage most of my students to open savings accounts at the banks. I continue to encourage their parents to help these students by supporting them with seed money for the opening of an account or register them for any life insurance. The very younger ones are encouraged to put part of their pocket monies into a pigeon bank/box for future use.
Thanks Naomy,
Knowledge about financial management is a key factor for business success, especially for youth entrepreneurs who are about to start a business. Lack of knowledge on financial management may result in young people starting their businesses without consideration of how much they require for funding their business ideas or where to get the funds, then they also may lack knowledge of how to be prudent in management of their resources when the business has started, especially when they may have obtained loans. Eventually the businesses may fail and they end up in debt, even when indicators arising from daily record keeping point to business failure, without knowledge of financial management, the youth entrepreneur may not be able to interpret these indicators and take appropriate action to save the business from failing.
The importance of financial management cannot be overemphasized and so the discussion paper has enlightened us on one of the major factors that may be responsible for young people’s inability to start and mange their businesses. In my own experience, how to source for finance by youth entrepreneurs is a major problem, because the opportunities for the youth is limited, for instance the conditions to access loans from banks are not youth friendly, because the youth are at an age where they have little or no collateral to give to banks and so young people depend on grants from government or other agencies or from family and friends.
Sources for Business Financing for young people are a major challenge, and so it will be helpful, if anyone can share ideas or options on business financing that can guide youth entrepreneurs during training sessions.
Shining star,
I agree with you that sources of youth business funding is a major challenge; this is attributed to the fact that banks and other lending institutions consider the youth as risky borrowers to invest in and find it expensive to administer the small loans to the youth. However, I still believe that with adequate and extensive entrepreneurship training to the youth, they can make very good enterprenuers who have a future in expandng their businesses and of course this would be an attraction to the lenders. What is critical here is equipping the youth with relevant and applicable skills....this means that the buck stops at the trainers, a group that is well represented in this training.
In the same breath, I think governments have a role to play in piloting the youth to be enterprenuers by providing soft loans for starting of youth businesses. A Youth Fund would be a perfect idea if well managed and sustained. The Kenya Youth Fund would be a good example for such an intervention that works well to develope the youth businesses initially such that by the time the youth approaches a bank, the business is self sustaining and the risks involved are minimal
Thanks Marc,
A Youth Development Fund is an excellent idea and i have heared a lot about the Kenyan Youth Development Fund, i met a beneficiary of the fund sometime in the year 2007. My country NIgeria is in the process of developing a Youth Fund and i am sure the Kenyan Experience will be of immense benefit. Hoepfully, i will hear more on the KYF from you at the Face to Face Traning
Thanks For Sharing
Shining Star,
I will really love to share with you about the successes and challenges of the Kenya YEDF. I will try to bring you some publications on the same. You can also access substantial information from the YEDF website
Hello Shining star. I cannot agree with you more. Financial management sometimes becomes a hindrance to even stating a business. Some young girls often distance themselves from business because of fear of managing finances. In delivering financial management training, it is important to make it very practical and relevant to them. It must be based on concrete businesses. The main challenge is always facilitator competence to demystify and simplify the training content. --Smauye 13:38, 14 April 2011 (UTC)
Smauye I totally agree with you that facilitator competence is key in delivering financial training for the you. But we may not require some one with PhD or MBA in finance, but someone that can make it and present in terms and language that can be understood by the youth.
Hello Participants,
Financial Management will help Youth Entrepreneur as follows; -To acquire accurate financial information to help them make good business decision -To understand the basic financial processes in an enterprise and using available information to determine finances which is require to start a business and to develop financial statement
The difficilties is how to source for loan to the youth and how committed they will be in the business to pay back the loan. However, i do encourage the youth to do savings by having account in the bank or do local contribution with a cooperative group
Thanks for your postings on importance of financial management for youth entrepreneurs. Most importantly the youths are in the most vulnerable position in mentaning the financial discipline. Therefore, beside the actual financial training, as a youth Entrepreneurship development facilitators we need to include a regular counselling on financial discipline as well . Another aspect is financial behaviours of youth which also can play significant role on proper financial management Yes, encouraging youth entrepreneurs to open regular saving accounts or group saving is another good strategy
Dear Ekanath
I agree with you that any financial management training for the youth must include follow up sessions in form of counselling and mentorship. This is beacuse some time the youth will feel discouraged by circumstances after they leave the training environment. Mentorship and counselling by role models can therefore help them to remain focused on achieving their goals
Hi Na'omi,
I have never delivered this type of training before, but your presentation is quite an eye opener.
However, financial management is valuable to the youth entrepreneurs as it enables them to keep track of the progress or otherwise of their businesses. It also encourages the habit of good planning , monitoring and evaluation of their enterprises and other aspects of their lives.Financial Management techniques are the pillars of any successful business.
Hi
Financial management is very important for any entrepreneur, including youth entrepreneurs who tend to have little or no experience in running an enterprise. Many youth have innovative ideas of what businesses to undertake but struggle to identify sources capital. This is particularly true in rural areas. My experience with most youth entrpreneurs is that they are not aware of the various funding opportunities or they may be aware of the opportnuties do not have detailed information and/or capacity to apply.
Learning about financial management enables youth entrepreneurs to develop some traits necessary for managing a business such as separating the business from family issues
Dear participants, This has been a very lively discussion. What I draw from your dicussions and contributions is that knowledge about financial management and the ability to apply this knowledge is key to the success of youth entrepreneurship.
What has also come out from this dicussion is that the youth usually have insufficient knowledge about financial management to enable them effectively source for business finance.
All these issues can form component of a financial management training. As stated in the discussion paper, training in financial managment must include guiding the youth to understand among other things the basic financial statements and their uses in an enterprise.
Hi Naomi,
Business is there to survive, grow and make profit. Knowledge of financial management is crucial for youth entrepreneurs as without it, there would be no way to judge the “financial health” of a business.
For youth entrepreneurs running two businesses, it would impossible to know which business is having a positive/adverse effect on the other if financial skills are lacking.
Ultimately, business is about making profit and as such gaining the necessary financial management know-how brings this objective to reality.
Naomi[edit]
I think before any youth, or any other enterprenuer, starts a business venture, a lesson on managing finances is a critical success factor. Business is not just about binging in money and taking it out in terms of overheads; its about doing these activities in a systematic manner with the goal of maximizing income and minimizing expenses. IT IS COMMON KNOWLEDGE THAT MONEY IS TEMPTING. A training on managing finances instils discipline to controlling money in and money out to ensure that the business grows. When young enterprenuers take financial management lessons, it enables the youth to plan business finances and facilitate the growth of the business since financial management encourages ploughing back profits. --Marcosmburu 16:17, 24 February 2011 (UTC)
hi everyone,youth entrepreneurs should learn about financial management in order for them to know how to manage their businesses financially and to be able to know what is really involved in financial management so that one does not make a mistake by misusing money.
HI everyone, it is of crucial importance for young entrepreneurs to learn about financial management because it would enable their businesses effectively. It will enable them to plan for their business in respect to knowing how much they need to expand. I have not had experience in delivering this training but I have had the opportunity to receive this training as a young entrepreneur. It has enabled me to effectively plan and see how I can improve my business and how I would be able to handle more finances when I business expands. Farai-Zambia
Financial management is the bedrock of every business. Getting it right and recognising the importance of the subject in entrepreneurship is key for survival. Financial management is even more important for youth entrepreneurship because peer pressure can be a strong force working agaist prudent financial management in youth entrepreneurship.
Finance is at the heart of business running, growth and survival. So the entrepreneur at all times should be planning where money would be coming from, what cost is involved in obtaining money even if he is retaining some of the profit. What is the cost of putting back the profit into the business? Financial management is about how to use money in the business wisely.
In fact another important issue of great importance is the issue of financial discipline among entrepreneurs. To me it is all about once ability to forgo certain lavishing expenditure and grow the business till it is grown, matured and ripped to be harvested.Some business fail in their early stage because owners harvest at an immature stage, which affects the firm's financial position. so financial discipline is important.
