Basics of financial startup are the fundamentals that startups must be aware of to ensure financial health and secure the funds needed to grow. Nine out of ten failures in startups are the result of insufficient knowledge of these vital elements. Cash flow is the reason. Without an understanding of how to track and project cash flow, a new business cannot manage its budget or invest in growth.
Essential startup accounting records, such as income statements (revenue and expenses) and financial projections are vital to prove the viability your business model to investors. These models must be meticulously calculated to accurately represent your company’s true economics and include cost that are easy to overlook such as shipping, taxes and insurance, processing charges, and utility costs.
If traditional lenders aren’t available family and friends may provide financing to startups in the beginning. However, in this scenario, it’s important to put any loan conditions in writing to ensure that there aren’t any conflicts regarding repayment obligations or expectations for future performance.
Startups can also look for venture capital from an individual investor or crowdfunding platforms like Kickstarter. However, these kinds of financing typically require an outline of the business plan that includes a detailed financial model. You can gain a better understanding of your company’s finances by creating the model. This will allow you to make informed decisions on how much capital to invest and what strategic goals to achieve in the next year.
https://startuphand.org/2020/09/09/financial-startup-basics-by-board-room/
