How important Financial Literacy is for small and medium size businesses

by Finway Capital Empowering People Financially

The Reserve Bank of India and various government agencies are collaboratively working to launch financial literacy programs and designing training modules that are easily accessible and available to the common people. These financial literacy programs are specifically aimed to educate every individual in India on the essentials of finance and commerce such as what are low interest home loans, what are mutual funds, and what are fixed deposits. Where there is much ado about the importance of at least basic financial literacy for an individual, the advanced level of financial literacy is a must for the success of small and medium size businesses, especially for the startups. In a dynamic and volatile business ecosystem where even the multinational businesses stand vulnerable to failure, the SMEs take business loans in Delhi and additional funding to ensure its safety and success for long run. The history itself has remained a proof of how financial literacy has emerged as the inevitable need of the hour in India.

The global survey of Standard & Poor's Financial Services LLC notes down that the number of financially literate adults account for only 25% in South Asian countries. This means that a major portion of population does not even have the much needed information about the difference between low interest home loans and unsecured business loans. The self-employed and the semi-skilled workers, perhaps, are the ones who mainly form the part of this population.

In the current scenario, it's the financial literacy among the masses which decides the speed and quality of India’s growth. The ability of an individual to take well-informed , calculated, and wise decisions related to finance on tax savings, low interest home loans, andunsecured business loans, etc., is called financially literacy.Here's how financially literacy is imperative to have for the small and medium size businesses because it has a direct impact on:

1.      The profitability and revenue generation of a business. This depends on how smart and effective the financial strategy has been laid out, for which the advanced level of financial literacy is a must.

The prevention of a newly started business from the potential risks related to finance. As a new business or SME is often kick-started with the secured or unsecured business loans, personal funding, venture capital, and equity finance, the senior management team should definitely be well versed with all know-how of the right and effective management of finance. 

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About Finway Capital Innovator   Empowering People Financially

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Created on Jan 23rd 2019 05:48. Viewed 438 times.


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