Friday Jul 11, 2025
Friday, 11 July 2025 02:20 - - {{hitsCtrl.values.hits}}
For an entrepreneur, financial literacy is the backbone of business sustainability and growth
By Channa Wanigasinghe
In today’s fast-paced and competitive business world, ideas alone are not enough to guarantee success. While innovation, creativity, and drive are crucial for entrepreneurship, one foundational skill often gets overlooked — financial literacy. For young entrepreneurs, especially those launching startups or venturing into business for the first time, understanding finance is not just helpful — it is absolutely essential.
What is financial literacy?
Financial literacy refers to the ability to understand and apply various financial skills effectively — including budgeting, saving, investing, and understanding financial statements. It encompasses everything from knowing how to manage cash flow, reading a balance sheet, and forecasting profit and loss, to making informed decisions about funding and taxes.
For an entrepreneur, financial literacy is the backbone of business sustainability and growth.
Why financial literacy matters for young entrepreneurs
1. Better decision-making
Young entrepreneurs often face key decisions like pricing their products, managing overheads, or choosing between financing options. A solid understanding of financial principles empowers them to make smarter, data-driven decisions rather than relying on instinct or guesswork.
2. Efficient cash flow management
One of the top reasons small businesses fail is poor cash flow management. Knowing when money is coming in and going out, and planning accordingly, helps entrepreneurs avoid shortfalls and stay solvent. Financially literate entrepreneurs are better equipped to plan for lean periods and scale effectively.
3. Access to funding
Investors and lenders scrutinise financial knowledge. Being financially literate enables entrepreneurs to speak the language of investors — demonstrating return on investment, risk mitigation, and scalability through numbers. It increases their credibility and chances of securing funding.
4. Compliance and risk reduction
Every country has its own tax laws and financial regulations. A lack of financial knowledge can lead to legal troubles or penalties. Understanding these requirements ensures compliance and reduces risk, while enabling entrepreneurs to take advantage of tax incentives and grants.
5. Sustainable growth
Growth can be dangerous if not well-managed. Entrepreneurs must analyse profitability, calculate break-even points, and evaluate cost structures to scale sustainably. Financial literacy enables them to grow their businesses without overextending themselves.
Common financial pitfalls of young entrepreneurs
These are avoidable with even basic financial training.
How to improve financial literacy
Young entrepreneurs can take several steps to boost their financial knowledge:
Financial literacy in Sri Lanka: The way forward
In Sri Lanka, many young entrepreneurs come from non-financial backgrounds, especially in tech, agriculture, and crafts. While the entrepreneurial ecosystem is growing, there’s a need for structured financial education embedded in entrepreneurship training. Government agencies, universities, and private sector organisations should collaborate to deliver accessible and practical finance training for youth startups.
Final thoughts
Financial literacy is no longer optional — it’s a vital tool for survival and success. It turns ideas into sustainable businesses and ensures that entrepreneurs are not just dreamers but doers. For young entrepreneurs, mastering money management early on could mean the difference between startup success and failure.
As the world shifts toward a knowledge-based economy, let’s empower our young entrepreneurs with the financial skills they need to thrive.
“You must gain control over your money or the lack of it will forever control you.” — Dave Ramsey
(The writer is Director at P W Holdings.)
Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.
Discover Kapruka, the leading online shopping platform in Sri Lanka, where you can conveniently send Gifts and Flowers to your loved ones for any event including Valentine ’s Day. Explore a wide range of popular Shopping Categories on Kapruka, including Toys, Groceries, Electronics, Birthday Cakes, Fruits, Chocolates, Flower Bouquets, Clothing, Watches, Lingerie, Gift Sets and Jewellery. Also if you’re interested in selling with Kapruka, Partner Central by Kapruka is the best solution to start with. Moreover, through Kapruka Global Shop, you can also enjoy the convenience of purchasing products from renowned platforms like Amazon and eBay and have them delivered to Sri Lanka.