The financial startup basics are the fundamentals that startups must have a firm grasp of to ensure financial health and secure the funds needed for growth. Nine out of ten failures in startups result from an absence of these basic elements. The reason is simple – cash flow. Startups that don’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 your startup’s financial projections as well as income statements. These models must be carefully calculated to accurately reflect the true economics of your company as well as the easy to overlook expenses like shipping, taxes and insurance, payment processing charges, and utility costs.
If traditional lenders aren’t financial startup basics fundraising tips available, family and friends can help startups with financing in the early stages. In this situation, however, it is crucial to have any loan terms outlined to ensure there are no conflicting repayment obligations or future performance expectations.
Startups can also seek out venture capital from an individual investor or crowdfunding platforms like Kickstarter. These kinds of financing typically require a written business plan, which includes a thorough financial forecast. Making a model helps you to better understand your company’s finances, allowing you to make informed choices about how much capital you require and what strategic goals you’d like to achieve by the time next year rolls around.