Financial Management in SMEs
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.
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
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
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.