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The 6 Things Every Young Entrepreneur Needs to Know About Finance

Financial know-how is one of the most important aspects of entrepreneurship. It’s right up there with passion, creativity, and leadership. A good grasp of finance helps you know what kind of investment you need, how to price your product, what to do with profit, and how to keep your business from going broke. 

However, financial skills don’t come naturally to everyone. Even if you just want to focus on the creative side of your business, you must take the time to learn at least the basics of small business finance. The more you know going into a small business start-up, the more confident you’ll be. 

As you take the time to learn about finance, notice how these are skills don’t only apply to your enterprise. These are life skills that can help you as you grow and mature from a young entrepreneur to the CEO of a multi-billion-dollar company. 


As a young entrepreneur, you probably don’t need as much startup capital as a bigger business. (Unless you are designing and producing a new line of zero-emission cars, in which case, please let us know!)  

But starting small doesn’t mean you will have zero money needs to get off the ground. Consider: 

  • Website hosting 
  • Logo graphic design 
  • Advertising 

That’s just to get started. If you’re also producing a product, you’ll need to factor in the cost of materials production. If you’re offering a service, you’ll need to think about things like transportation and tools, I.e., a lawnmower or bike. 

Try to limit your expenses at first. Don’t invest in anything you don’t need to get up and running. You can always re-invest and scale up once the profits start coming in. 


It’s so much nicer to daydream about your business going smoothly all the time. No one wants to think about the worst-case scenario. However, if there’s anything we’ve all learned in the past few years, it’s that you simply cannot predict the future.  

The best young entrepreneurs are the ones who are prepared for anything. Having some money in reserve makes excellent financial sense. It should be part of your emergency plan. Try to have at least one month’s expenses saved somewhere. 

There are more reasons to have a reserve than potential pandemics or natural disasters. Slow business months, personal emergencies that take you away from your business, and vacation time all create gaps in keeping your enterprise up and running. A reserve of money will bridge that gap. 


Every young entrepreneur probably dreams of making a profit and building their company into a huge success. Maybe you picture yourself on the cover of Forbes magazine or giving interviews as one of the Top CEOs Under 30. Those are fantastic goals, and you should aim high! 

Before that happens, though, you need to hit a few smaller milestones. Think about how much money you’ll need to make to break even from what you’ve invested. Come up with a realistic timeline for hitting that mark. Do you have investors you need to pay back? That’s another goal to think about. 

Next, plan for profits. When the money starts coming in – and you’ve covered your overhead expenses – what will you do with that money? Re-invest in yourself and grow your business? Donate all profits to a charity?  

Just a quick note: remember to pay yourself! 


When it comes to business (and life in general), you must keep track of every single cent you spend and every single cent you make. This is a hundred times more important if you have investors. They’ll want to see hard numbers for themselves, and “Everything’s fine!” is not an appropriate answer. 

This is called bookkeeping, and it may be one of the most important things you learn as a young entrepreneur. 

There are online accounting services you can use, but you don’t need anything fancy at your level of startup. A simple Excel worksheet will do just fine. If you don’t already know how to do formulas in Excel, it’s easy to learn.  

Every single time you spend money on your business put it in your spreadsheet. Every time you make money put it in your spreadsheet. This way you will easily see whether you are making a profit or not. Keep receipts somewhere safe in case you need them to reconcile a mistake.  


Once you get the hang of basic bookkeeping, level up to separating your expenses by category: 

  • Advertising and marketing 
  • Servers and online hosts 
  • Manufacturing 
  • Transportation 
  • Tools and materials 
  • Your pay 

When you see not just how much money you’re spending but what you’re spending it on, you’re more likely to make better business decisions. For example, if you’re paying for YouTube ads, but you see that few if any of your customers come to you via that ad, you might reconsider that expense. 


The free budgeting software tool You Need a Budget (YNAB) has a great philosophy: every dollar should have a job. What that means is, every single dollar you spend on your business needs something to do.  

Maybe we sound repetitive, but successful entrepreneurship means no dollar gets wasted. Every single startup expense needs to be covered and accounted for. As the profits start rolling in, every dollar needs to be assigned to a job: reinvesting, paying back investors, covering overhead, paying yourself, or a charitable cause.  

Dollars that just sit there with nothing to do are more likely to be spent unwisely. No young entrepreneur wants to be thought of as unwise! Success includes accountability (literally and figuratively). Know exactly what every single dollar of profit needs to do. 

These skills may seem pretty basic, but they will get you started on the road to financial success. When your business thrives and grows beyond your wildest dreams, you’ll thank yourself for putting in the time and effort to learn financial basics! 

Florida’s young entrepreneurs are encouraged to apply for a Kantner Foundation college scholarship. Learn more by clicking here!

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