THE BLOG
01/05/2014 09:40 BST | Updated 30/06/2014 06:59 BST

If You Don't Know Your Numbers, You're Screwed as an Entrepreneur

Financial education as an employability skill is clear. In fact The Howard Davies Review of Enterprise and the Economy in Education identified financial literacy as an essential ingredient of employability.

In the US employers are increasingly checking the credit history of a potential employee. They use it to judge how responsible their potential new worker might be and how financially stable. Financial alarm bells can hinder someone's chances of getting a job offer. An unwelcome additional hurdle in an already tough market.

And what is critical for future workers is equally critical for future business owners. How much more important is being a financially capable entrepreneur when there is no corporate safety net should productivity or mental health be impaired.

As we increasingly become a nation of entrepreneurs, with one in four new graduates 'seriously considering' self-employment, it is gratifying to see universities, and colleges, tapping into this movement.

Institutions have many priorities and in a competitive education landscape coupling financial capability with enterprise and employability creates a clear point of differentiation.

From Coventry University's Student Enterprise Fund to The Enterprise Club at Northampton University, and dozens of others, education institutions are helping harness the talent of students and flame their desire to captain their own ship.

While exciting and potentially hugely rewarding setting up a business, even with mentoring and support, is not for the faint hearted. Start up businesses have a very high failure rate and according to government stats 20% of new businesses fail within the first year and 50% won't be around within 3 years.

They fail for a variety of reasons; from not listening to customers to not having an adequate grasp of the industry but one challenge is a thread through them all - a lack of financial clarity.

Too many young entrepreneurs don't grasp their numbers; They don't know their breakeven points, they don't understand expenses and taxation and most crucially they don't factor in the personal costs; rent, electricity, mobile, transport and food bills are constant, and relentless, whether the business is succeeding or not.

Those who are self employed whether in a trade, offering consultant services or looking to build the next Facebook, even artists, actors and musicians, everyone needs to be able to mind their own business... and that means their money.

Matthew Stafford of Student Upstarts, who are aiming to invest in 100 student teams this year, believes "students are absolutely capable of starting their own businesses. The students we meet have business sense as well as the strong drive and ability to create terrific success stories".

He cautions though that students must have a strong grasp over their personal, as well as their business's, financial position. "We help with some start up cash, advice, contacts and mentoring and I am certain that students who are more comfortable with the important numbers, in their life and their business, are better able to focus on developing and growing their business without the daily concern over whether they can pay their rent"

Starting a business is a big step that demands energy and commitment. Encouraging enterprising students to take full advantage of their university years by ensuring they graduate with quality financial education as well as academic, and entrepreneurial, prowess will set them up for life whatever their chosen career path.