Afshin Afsharnejad has always been one to balance the books. He started his career as an accountant but has since worked at top investment advisory firms in London. With a long career spanning over a decade, Afshin Afsharnejad is an expert in initiating and financing business operations.
In this interview, Afshin Afsharnejad explains the need for financial education for entrepreneurs.
Why is financial education important for entrepreneurs?
Entrepreneurship is based on the commercialization of ideas; this often leads to innovation. However, a crucial part of marketing is acquiring start-up capital. Most schools, however, do not offer finance courses as part of the curriculum. Afshin Afsharnejad argues that if this crucial element is not taught, entrepreneurs lack the right sets of tools to fully utilize their entrepreneurial drive in the pursuit of innovation.
What are the most important takeaways for new entrepreneurs?
Small businesses often need financing. Start-ups are particularly in need of funding. Afshin Afsharnejad says it can be difficult to find this money. Tighter lending standards, along with venture capitalists still recovering from the fallout of the recession, have created an environment in which funding is hard to come by. According to Afshin Afsharnejad, explains that small businesses have two basic types of financing: debt financing and equity financing. However, without clear distinctions between the types, it is sometimes difficult for small business owners to discover the best avenues for marketing their ideas.
What qualifies as debt?
The simplest form of financing is debt financing, explains Afshin Afsharnejad. Buying a house, buying a car, or using a credit card are all forms of debt financing. A loan is something you borrow from a person or business and promise to pay back with interest. Debt financing your business works the same way. Business owners can apply for business loans from banks or receive personal loans from friends, family members and other lenders, all of which must be repaid. Even if your family members lend you money for your business, they must charge the central bank’s minimum interest rate to avoid gift tax.
Debt financing has many advantages. You don’t have to worry about the lender controlling your business. Once you repay the loan, your relationship with the financier ends. Thereafter, the interest you spend is tax deductible. Ultimately, it’s easy to predict costs because loan amounts don’t fluctuate. In my industry, this is common advice for new entrepreneurs, says Afshin Afsharnejad.
What qualifies as an equity investment?
People do not understand equity financing as well as debt financing because equity financing applies to investors. You can deliver shares of your company to family, friends and other small investors, while equity financing often applies to venture capitalists or angel investors. The popular ABC series, “Shark Tank,” focuses on entrepreneurs who pitch their business ideas to a group of investors in an effort to secure equity financing.
According to Afshin Afsharnejad, an increased focus on explaining financial concepts such as debt financing to entrepreneurs will allow entrepreneurs to visualize the important key steps their business needs to take in order to succeed. This will in turn help them achieve their own personal and financial goals through business success in record time.
Contact Name: Afshin Afsharnejad
Country: United Kingdom