Financial startup basics are the essentials that startups need to have a firm grasp of to ensure their financial health and secure the funds required for growth. Nine out of ten startup failures result from the absence of these fundamentals. The reason is simple: cash flow. A startup that doesn’t know how to monitor and forecast cash flow will not be able to manage its budget, or invest in growth.
Investors should have access to the financial projections of your startup as well as income statements. These models need to be carefully constructed to accurately reflect your company’s true economics which includes the easy to overlook expenses like taxes, shipping and insurance, payment processing charges, and utility costs.
In the beginning startup companies can get funding from family and friends if traditional lenders are not an alternative. In this scenario, however, it is crucial to have any loan terms outlined to avoid conflicting repayment obligations or future performance expectations.
Startups can also look for venture capital from private investors or crowdfunding platforms like Kickstarter. These kinds of financing typically require a business plan, which includes a detailed financial forecast. Making a model helps you to understand the financials of your business, allowing you to make informed choices regarding the amount of capital you need and what strategic goals you’d like to achieve by the end of next year.
www.startuphand.org/2020/05/08/financial-startup-basics-for-business-owners/