The importance of financial education in the context of women's entrepreneurship

Women across India have been fiercely moving towards building their careers and businesses to support themselves and their families. They have been changing the entrepreneurial ecosystem by expanding their footprints and designing unique business models. While the MSME sector has been penetrated by these bold women, they have also been expanding their footprints and creating a mark across industries and various roles, including but not limited to defence, law, media, technology, science, commerce and bureaucracy. 

Challenging the stereotypes and limitations set by society, these women have been boldly writing their own stories and creating history. While building a business isn’t an easy task, given its various risk factors, managing finances and the need for understanding the market, its demands and the importance of creating a value-added business model, women entrepreneurs of today have managed to venture into this ecosystem and curate strong profitable businesses. And this marks just the beginning of everything they are achieving and will continue to achieve in the future. These women entrepreneurs are shaping a bright and value-focused future for the business world.

While women entrepreneurs are building successful businesses, they are also playing a vital role in boosting the economic development of the nation. Cognizing the need for various necessities and turning them into executed ideas, these women are curating businesses when others are unable to understand the need for them. These female-led successful businesses are also generating jobs and providing for various families. Many of these companies are hiring other women and training them for different roles at their companies. This has helped other women obtain sustainable employment and make a better future and standard of living for their families. 

This has also built confidence in these women regarding their skills and talent and allowed them to take on higher positions and roles at various businesses. This goes to show how these female-led businesses are also helping other women and families to make a better life for themselves. With more women stepping into the working sector and improving their family's standard of living and with higher levels of employment due to these women-led companies, the economic development of the nation is bound to rise.

While these female entrepreneurs are working arduously to build successful businesses, finances and financial handling are major issues as they try to grow, raise investments and expand. According to a report by Google and Bain & Company, women-owned companies have risen from 14% to the current 20% over the last decade. Additionally, a HerStory’s Women Entrepreneurship in India report published in 2019 showed that funding raised by all-female founding teams in India in 2018 was only 0.63% of the total $13 billion raised by entrepreneurs in the ecosystem. This goes to show how finances and financial education along with other factors have been one of the major things holding female entrepreneurs back.

Financial education and training are essential to run a business. With credit access being one of the biggest challenges for women-led MSMEs, it is vital for them to understand how the banking system works, how to invest the money for the growth of their business and how to manage their company’s finances. Also, in the business world, investors are still more likely to provide funding to women who know and understand how finances work and have a bold and realistic plan on how they will be utilizing this funding to expand their business. 

Additionally, having financial knowledge can prove to be a deal-breaker for any business. If one does not understand and plan ahead of time for their capital and allocation, the business will eventually fall apart or drain itself. Having financial education on handling capital will help these women understand how to gain access to credit and help them avoid being tricked into fraudulent loans and heavy rates of interest.

While building a business is difficult, growing and expanding it is an even harder job. Finances and investments play a vital role in making a business successful. Gaining knowledge of the financial world will help these women build a strong foundation for their MSME businesses and grow into success stories. This will ultimately also help build a stronger foundation for their communities and boost India’s economic development.

Author: Mr. HP Singh, Chairman cum Managing Director, Satin Creditcare Network Ltd