With the financial services sector taking the brunt of the challenges facing the wider economy, there is a growing need for financial literacy and competence in business to support growth.
With about 99 per cent of businesses in the UK’s private sector being SMEs, tuition of business finance in schools and colleges could not only enhance the employability of young people, but also empower a new generation of business leaders to run their enterprises more effectively.
In fact, many experts argue that if financial literacy for companies was better across a cross-section of company leaders, then the economy would be more stable.
Lack of awareness due to the absence of dedicated finance functions in small businesses means business leaders struggle to keep on top of the financial health of companies. Training and education for business as part of the main curriculum could provide a vital lifeline in helping leaders to perform basic yet necessary business functions. After all a more financially literate leader is likely to prov-ide a more informed strategic direction for a business.
One of the most common financial mistakes made by small businesses involves wasting time managing expenses instead of generating revenue. The issue isn’t just limited to small companies, and occurs in medium and large sized enterprises where there may be a dedicated finance function.
It can only be good risk management for a larger body of key decision-makers inside each organisation to understand the financial language of business. Relying on a small number of specialists can mean that should mistakes be made there are very few internal people who would spot any errors.
To help address this issue, the Financial Skills Partnership has developed the business administration and finance diploma, which is offered to young people aged 14-19 as an alternative to GCSEs in England and Wales. This was developed by employers, with Tony Cohen, the chair of the working party who is a small business owner and IFA.
The FSP is also working with Lord Baker on a bid to develop a university technology college for financial services. It has also been calling for a business finance module to be available in all university technology colleges regardless of discipline.
Whilst there are many study options available whether it is at college, self-study or reading “idiot’s guides”, at school, it is in the gift of the head teacher, in many instances, to allow pupils to study such a module.
At policy level, the writers of the education curriculum(s) could ensure that all school- children study such subjects. However, it could take seven years to see the result of curriculum changes, so in the meantime we encourage employers to partner with us on developing solutions.
So while the issue resonates with businesses operating in all sectors, I believe that the the financial services sector should take the lead and persuade key stakeholders to work together to elevate the need for this most essential business skill.
Liz Field is chief executive of the Financial Skills Partnership