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Prof. Slađana Benković, Ph.D., FON - What every entrepreneur needs to know about financial literacy?
Source: eKapija
Saturday, 14.12.2024.
13:10
Saturday, 14.12.2024.
13:10
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Slađana Benković (Photo: Lična arhiva)
The causes are often hidden in poor resource management, lack of strategic planning and ignorance of key financial indicators. Entrepreneurship is a hectic and challenging adventure and a basic knowledge of finance can be the key to the success of any business. Professor Slađana Benković, Ph.D., full professor of the Faculty of Organizational Sciences at the University of Belgrade, emphasized in the interview for eKapija that financial literacy is a basic tool which helps entrepreneurs in making timely and informed decisions.
The professor obtained her bachelor`s degree in 1997 at the Faculty of Organizational Sciences, where she also obtained her master`s degree in 2000, that is, a doctorate with the topic "Development management and financing modalities for enterprise development" in 2004.
Her career was marked by advanced studies at international universities such as the Pforzheim University in Pforzheim, Germany; the George Washington University in Washington DC, USA; the Faculty of Economics and Business in Rijeka, Croatia; the University of Kranj, and University of Maribor, Slovenia; and indeed numerous other universities.
In the period from 2011 to 2021, she was a member and president of the endowment board of the University in Belgrade, as well as a member of numerous juries with which endowments awarded the best researchers among students and teachers of the University of Belgrade. However, perhaps the most important professional trust has been given to her when from 2013 to 2019 she was a member of the Financial Council of the University of Belgrade.
Slađana Benković is a very committed researcher, and her participation in numerous research and scientific projects is evident, at home and abroad. For the past ten years, she has been actively engaged as a consultant for financial operations in international companies, in the country and the region. As of February 2024, she started a podcast as part of her company`s project activities The Language of Finance.
- Financial literacy is synonymous with the ability to understand the money management process, by its multiplication and investment and savings. Financial literacy promotes a sense of control over one`s financial well-being. Knowing how to effectively manage money reduces stress and anxiety. Financial literacy can be said to be knowledge which ensures lifelong financial security. Financial literacy is important to all citizens, and also for entrepreneurs. It empowers them with knowledge and skills to make decisions based on reliable information related to budgeting, investing, saving or insurance. Financial literacy allows them to have greater confidence when opting for certain types of financial products and services, but at the same time it reduces the risk of making bad choices - says Prof. Benkovic for eKapija.
Most common mistakes due to lack of financial knowledge
The most common mistake made by entrepreneurs is, according to our interlocutor, not knowing the difference between a Cash Flow Statement and an Income Statement.
- Mistakes depend on the entrepreneur`s prior knowledge of financial operations. Most often they need time to understand that the maturity of cash inflows and outflows of the business is linked to the Cash Flow Report, not to the Profit and Loss Account. Then, certain indicators of activity and liquidity must be monitored every day and all day long, in order to make the cash flow work for them. It is often an issue to recognize the moment when they need to separate the decision-making and financial management process from the business management process, and bring in someone who will only deal with financial management professionally. It is an extremely stressful moment for entrepreneurs, because they feel they are losing control over the management of their assets and passing a decision on the dynamics of payment and collection. In fact, I often say that finance is the lifeblood of any business system. So a wrong decision affects every part of the business - explains the professor.
The biggest challenge every entrepreneur faces, as our interlocutor adds, is a good setting of the financing source structure, i.e. in simple words the ratio of own assets and borrowed (credit) assets, maintenance of liquidity at an adequate level, but perhaps in the first place, the rationality of the investment.
- Entrepreneurs often follow an idea, not the financial logic. That is why it is important that they have someone who will follow them with financial advice (tax, separation of own assets from company assets, etc.) and for them to understand why it is important to listen to that financial expert - she points out.
Small businesses often don`t have the resources to employ financial professionals, but there are alternatives.
- That`s the biggest challenge, but indeed commercial and business banks as well as EU grants, USAID and SIDA grants have advisory support programs which are accessible to micro, small and medium-sized enterprises. Chambers of commerce also organize workshops for entrepreneurs. However, I think that every entrepreneur has to go through his own entrepreneurial journey. And along the way he will meet entrepreneurs who have walked that path before her or him. It is their experience and any advice is welcome. I want to say that no matter the time gap, the specificity that follows a certain activity, everyone who is an entrepreneur had to leave their comfort zone and has their own business story and lesson. These lessons are more or less expensively paid for, but they are absolutely free for every new entrepreneur - says the professor for our portal.
What should every entrepreneur know?
Knowledge is the first step towards skill development. Professor Slađana Benković advises entrepreneurs to invest in basic finance education through formal and informal learning.
- To begin with, entrepreneurs need knowledge, the skills come later through work and practice. You can gather knowledge by studying at the university, through training and coaching, but also by listening to podcasts such as the podcast The Language of Finance which I edit and run. I designed this modern form of learning so that through a conversation with experts who have achieved success as entrepreneurs, investors or experts in areas that have an impact on finance and financial decisions, we offer good advice to the listeners related to investments, savings, taxes, personal finance, but also business management. They often say money talks, and I`m sure it also tells stories. And we have woven some of these stories into the podcast The Language of Finances - she says.
"Not everyone is born a swimmer"
Prof. Slađana Benković, Ph.D. emphasizes that basic knowledge of financial business is crucial for every entrepreneur before he starts realizing his idea.
- Many entrepreneurs like to say: `When you jump, you have to swim`, but I believe that preparation is key, because not everyone is a `born swimmer`. Lack of understanding of finance and its language often leads to the failure of entrepreneurial ventures at the very beginning - she stated.
Benković adds that knowing financial language is important, because "finance has a universal language, which is read and written in the same way everywhere in the world.
Influence on the wider economy
Financial literacy of entrepreneurs has a far-reaching impact on the development of the overall economy of the country.
- In the developed countries, financial literacy is a vital accelerator of societal progress. Children who are taught the basics of finance from an early age later become successful entrepreneurs - the professor concludes.
Ivana Žikić
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