Startup Basics – Financial Start-Up Basics

Startups require a thorough understanding of financial fundamentals. If you want to convince investors or banks that your business idea is worthy of investment, crucial startup accounting records such as income statements (incomes and expenses) and financial forecasts can help.

Startup financials typically boil down to a straightforward equation. You have cash in your bank or you’re in debt. Cash flow can be a problem for new businesses and it’s important to monitor your balance sheet so that you don’t overextend yourself.

You’ll need debt or equity financing to expand and make your startup profitable. Investors will usually look at your business’s model, projected costs and revenue and the possibility of earning a profit from their investment.

There are many options to start a business such as obtaining the business credit card that has APR that is 0% to crowdfunding platforms to help a new business. It is important to note that the use of credit or debt could impact your personal and business credit score and you should always pay off your debts in time.

You can also borrow money from friends and family members www.startuphand.org/2020/05/08/financial-startup-basics-for-business-owners/ who are willing to invest. While this might be an ideal option for your startup but you should make sure to set the terms of any loan in writing to avoid conflicts and ensure that everyone understands how their contribution will impact your bottom line. In addition, if you give an individual shares of your company, they’re considered an investor and that needs to be governed by the law of securities.