There is an important benefit for businesspeople who are financially literate. Financial literacy helps them to function efficiently at work because they are able to evaluate the information needed to make decisions that have financial ramifications or consequences.

Research into the financially literate has tended to concentrate on personal finance issues involving the general public. The focus of this paper, however, is on entrepreneurs who, in their first year as owners or managers of small firms, are required to understand the financial position and activities of their organisations, and thus do not need to take the activities, statements and advice of their accountants and financial advisors on trust.

Using data collected from 147 small businesses over their first year of trading, the findings provide evidence of a degree of financial illiteracy which has implications for the success or failure of this section of the business community.