How Can Students Learn About Accounting And Finance Through Startup Wars?
Startup Wars allows students to learn to develop important skills in accounting and finance.
What exactly is accounting? Accounting is:
“the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations”-Wikipedia
There are so many things to know about accounting that a student can learn through Startup Wars.
Students learn the basics of finance through profit and loss, weekly reports, and monthly reports. These reports show students specific information, such as their financial data, income and expenses.
In Startup Wars, the student sees a completely detailed financial report at the end of each sprint. This report shows the student their progress, and shows them if they need to pivot their current strategy or direction in order to be more successful.
Students learn to analyze the balance of how much money they have, as well as potential risks – for example, if they will hit bankruptcy soon.
The Startup Wars game allows a student to directly experience the importance of financial decisions in the business world.
Why Should An Entrepreneur Know Basic Accounting Principles And These Concepts?
It is important for an entrepreneurial student to know the basic concepts of accounting and finance in order to run a successful business in the future. These lessons are applicable to real life.
If the end goal for the student is to start a business, they will need to know accounting terms – and how they work.
Knowing accounting and financial concepts will help each student to have better organizational skills, as well as a strong understanding of how things work – making the likelihood of their business succeeding better.
What should a startup entrepreneur know about accounting, or, What two pieces of information are arguably the most important to any business?
There are two things that any startup entrepreneur should learn about accounting:
- Outflow: This is the amount of money a startup is spending in any given month. This is lost income.
- Balances: It is critical for an entrepreneur to know how much longer they can float, given their current situation. A strong business leader is fully aware of the remainder of their assets, including investments and assets.
These two factors are the most important pieces of information, and they are critical to a startup’s success. A startup must have clear and accurate financial data for decision making.
What Are The Indicators An Entrepreneur Should Be Looking At To Avoid Risks?
Starting a company involves innate risk.
There are five key indicators that an entrepreneur should carefully look for financially.
These indicators include:
- Growth: An entrepreneur needs to make sure that they are seeing a trend in their business and accounting activities towards rising profits and sales, in order to have growth.
- Profitability: What is profitability? A Startup company needs to be profitable. Profitability means that your business is gaining profit. Knowing your profitability index and your profitability ratio is key.
What are profitability ratios? Ratios are the numerical values taken from the company financial statements to try to see the overall financial condition of your startup.
What is the profitability index? The index is the ratio of payoff to investment. The index ranks projects by the amount of value in an investment.
- Liquidity: Every company should have liquidity – an availability of a company’s liquid assets. This is a startup’s ability to get their hands on immediate cash, if and when needed.
- Leverage: A company can leverage its capital in order to operate and grow. A startup leader must review financial statements carefully in order to have a clear view on capital.
- Activity: this is the chosen management of company assets.
Measures of profitability must be carefully accounted for, because no one ever said accounting is easy.
Knowledge of the above steps will help the entrepreneur avoid any financial risks. Startup Wars helps a future entrepreneur to be exposed to this knowledge risk-free.
Important Accounting Questions When Starting A Business
One of the most important things to do when starting a company is to ask a lot of questions.
Accounting is critical, and a future entrepreneur needs to not only have basic accounting skills, they need to also ask the right questions in order to have all of the necessary information needed to run their startup smoothly.
Some of these important questions are:
- Am I familiar with the necessary accounting terms to succeed?
- What is the best plan for financing my new business?
- What is the best way for me to structure my small business?
- Will I create a new / separate bank account for my business?
- How will I keep records of cash flow?
- What corporate financial reporting will I explore?
- What kind of accounting will be best for my business? Cash-based accounting or accrual?
- Where can I get advice when in doubt?
Startups place a huge amount of time and importance on creation and innovation. The same level of importance needs to be placed upon their accounting measures to bring their visions to fruition.
Entrepreneurial Accounting Is Learned
Each startup is unique and faces unique challenges. A startup student needs to be prepared as possible in order to succeed.
In addition to this, learning accounting skills is useful and important in everyday life, too.
Why is accounting important in everyday life?
The reality is, basic accounting is one of the most essential life disciplines we can all have! We may not all have a CPA for entrepreneurs, but accounting skills are needed just to get by.
Think about it…accounting is a part of everything, like: tracking our spending, getting our groceries, saving and planning, and simply paying our bills. It’s a part of everyday adult life.
If you want to know how to get better at accounting, embrace technology, find joy in analyzing data, research accounting tricks, and study!
And of course, accounting is critical in forming your startup…!
Startup Wars classes, like Accounting for Entrepreneurs, and more, give each student the invaluable opportunity to gain accounting experience and more, in a safe environment.
The future entrepreneurial leaders of tomorrow are in safe hands with Startup Wars.
