Financial Startup Basics
pFinancial startup basics are the essentials that startups need to have a firm grasp of to ensure financial health and secure the funding needed to expand. Without these fundamentals nine out of 10 startups fail. The reason is simple: cash flow. Without a grasp of how to track and forecast cash flow, startups cannot manage its budget or invest in growth.
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pEssential startup accounting records, such as income statements (revenue and expenses) and financial projections are essential for demonstrating the viability of your business plan to investors. These models should be carefully calculated to accurately reflect your companys economics. This includes easy-to-overlook costs such as shipping, taxes and insurance, processing fees for payments and utilities.
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pIn the beginning startups may seek out financing from friends and family members if traditional lenders are not an option. However, in this scenario it is crucial to write the loan terms in writing to ensure that there are no disputes over repayment obligations, or expectations for future performance.
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pStartups may also look for venture capital from a private investor or even crowdfunding platforms such as Kickstarter. However, these types of funding usually require the creation of a business plan in writing with a complete financial model. You can gain a better understanding of the financials of your business by creating models. This will help you make informed decisions about how much capital to invest and what strategic goals you want to achieve over the next year.
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