Rethinking Financial Literacy

What Entrepreneurs Actually Know, And Why It Is Important

by Sînziana Răcaru, EMBA

With a foothold in finance and the corporate world and a close proximity to entrepreneurship through friends and family, I often found myself puzzled by the fact that smart, capable entrepreneurs seemed to be lacking the basic financial knowledge that I assumed was necessary for businesses to thrive. I thought, since financial literacy was linked to business performance, why did it seem to be actively ignored by those running small ventures? These were people navigating complex market challenges, so it was not likely they were completely financially ignorant. What was I missing?

What We Knew, And What Was Missing

Well… among the things a business school will teach you is that assumptions need to be challenged and quick, standard explanations may fall short of revealing the root of a problem. The research literature was clear on one point: financial literacy matters. Studies consistently show that entrepreneurs with stronger financial knowledge make better decisions, access more financing, and grow more successfully – and this generally holds across countries and industries. It also shows that various factors influence how entrepreneurs approach finance: behavioral biases, cultural attitudes toward debt, access to support mechanisms (financial services, advisors) and the regulatory environment, all have a role to play. What was lacking was a general consensus on how financial literacy actually manifests (what entrepreneurs actually know about finance) and why many entrepreneurs seemed unable or unwilling to develop it further (why they approached it the way they did).

Unexpected Insights

Looking for the missing pieces of the puzzle, I set up interviews with 12 entrepreneurs across various sectors. As the stories were adding up, it became apparent that financial literacy was a dynamic, adaptive process. Entrepreneurs didn’t simply “have” or “lack” financial knowledge, but they operated at different stages of financial reasoning, starting with basic cash-in/cash-out survival logic and potentially progressing toward structured planning and strategic analysis as business complexity increased.

Yet this progression didn’t always happen, and three major barriers became apparent. The first was contextual: on the one hand, entrepreneurs constantly juggle with limited resources and get fully involved in all aspects of their venture, which leaves little room for strategic planning; on the other hand, the volatile regulatory environment makes long-term planning feel pointless anyway. The second was learning behavior: entrepreneurs strongly prefer experiential, problem-driven learning over formal education; they learn by doing, and tend to trust peers and family over external experts. And last, entrepreneurs are highly intuitive in their decision-making: they rely heavily on gut-feeling, which makes sense in volatile environments because it enables rapid adaptation and quick action.

These insights led to an unexpected realization: entrepreneurs do not avoid or dismiss financial knowledge out of ignorance; they adapt and build capabilities gradually. Yet the short-term thinking that helps them survive, also prevents engagement with the analytical approaches generally required to scale. So where does that realization lead?

What This Means for You

In this large business ecosystem, if you’re working with entrepreneurs, meet them where they are, not where you think they should be. If you’re offering services, design interventions that match their current needs (cash-flow management tools for early-stage businesses, planning frameworks for those ready to scale, strategic finance for established companies seeking transformation). If you’re offering knowledge, remember that for entrepreneurs, the moment of need is the moment of learning: on-demand resources that address specific challenges may be more valuable than comprehensive courses in whatever subject. And in any type of partnership, place the relationship above your credentials: building trust is essential, so prioritize creating actual value – understand the business, the sector, and provide viable, personalized solutions.

And if you are the actual entrepreneur in this equation, consider that the path to scale may actually start with recognizing when instinct has reached its limits.

This article is based on the qualitative research Sînziana did for her MBA Master’s Thesis.

Sînziana Răcaru is a finance professional with 15+ years of experience in financial analysis, credit risk, and portfolio management. Following her Executive MBA, she co-founded Altstart, where she works with business owners on financial modeling, pricing and growth strategy, translating numbers into insights for decision-making.