Understanding the Financial Educational Needs of Entrepreneurs: A Survey of Entrepreneurs and Financial Advisors

ABSTRACT Finance is a crucial topic for nascent entrepreneurs to study, as appropriate financial planning and management are essential for survival and success. The current study addresses 30 finance topics commonly taught in university courses. Both practicing entrepreneurs and various types of financial advisors evaluated each topic regarding its level of importance for inclusion in entrepreneurial finance courses. All 30 topics were considered at least "fairly important" for inclusion by both groups. However, some important differences did emerge between the two groups. Entrepreneurs felt six of the topics are significantly more important than did the financial advisors. Financial advisors felt only one topic, forecasting and financial statements, to be significantly more important than did entrepreneurs. INTRODUCTION There has been a striking increase in the level of interest in entrepreneurship. A strong indicator of such interest is the unprecedented rise in the rate of new business formation. According to Stevenson (1999), the number of annual new business incorporations doubled from about 300,000 to over 600,000. This is mirrored by an explosive growth in the amount of capital committed to venture capital firms in the United States. Due to this dramatic upsurge in entrepreneurial activity, business schools across the nation are devoting more and more attention to the discipline of entrepreneurship. The Top 50 Entrepreneur-Oriented Universities, according to Success Magazine (2001), includes such names as Babson, DePaul, Cornell, MIT, Stanford, Columbia, to name a few. As the number of entrepreneurship education programs has increased, so too has the number of business schools offering specialized courses in entrepreneurial finance. In recent years, a small number of new entrepreneurial finance texts have been published to support this nascent market. The increased attention paid to entrepreneurial finance appears justified, given the academic evidence that strong finance skills increase an entrepreneur's chances of business success (see, e.g., Ball and Shank, 1995, Envick, 1999, Gresham and Franklin, 1996, and Hood and Young, 1993). However, there is significant diversity in the topics covered by the existing entrepreneurial finance texts and no studies have investigated exactly which finance skills are most important for entrepreneurial success. The purpose of this study is to gather evidence on which finance topics should be taught to entrepreneurship students, according to entrepreneurs and their financial advisors. LITERATURE REVIEW A large number of academic studies have investigated ways to improve introductory corporate finance courses and finance curriculum in general. Mindful of the limited amount of material that can be covered in one course or in one academic major, some earlier researchers focused on identifying the most important finance topics. For example, Cooley and Heck (1996) surveyed finance professors to identify which topics were viewed as most important to teach in introductory (corporate) finance courses. McWilliams and Pantalone (1994) surveyed financial executives of large corporations to identify important courses to offer to finance majors. Related studies emphasized the differing perspectives of academics, practitioners, and students. DeMong, Pettit and Campsey (1979) surveyed financial executives and academicians to learn the differing perceptions of what skills finance majors most need. Graham and Krueger (1996) compared the opinions of chief financial officers and finance students regarding the importance of various skills to finance majors. Hall and Williams (2001) compared the views of chief financial officers and finance students regarding the importance of financial and non-financial objectives. Perhaps one of the more interesting studies was Gup (1994), who asked finance professors and chief executive officers (at mostly larger corporations) to identify the most important topics to teach in an introductory finance course. …