Financial startup basics are the essentials that startups need to have a firm grasp of to ensure their financial health and secure the funding required for growth. Nine out of ten failures in startups result from the absence of these fundamentals. The reason is simple: cash flow. Startups that don’t know how to track and forecast cash flow will be unable manage www.startuphand.org/2020/09/09/financial-startup-basics-by-board-room/ its budget, or invest in growth.

Essential startup accounting records, such as income statements (revenue and expenses) and financial projections are essential to demonstrate the viability of your business plan to investors. These models should be calculated carefully to accurately reflect your company’s economics. This includes easy-to-overlook expenses such as shipping taxes and insurance, payment processing fees and utilities.

In the early stages startup companies can get funding from family and friends if more traditional lenders aren’t an option. In this instance, it’s important to put any loan conditions in writing to ensure that there are no disagreements regarding repayment obligations or expectations for future performance.

Startups can also seek venture capital from crowdfunding platforms or private investors such as Kickstarter. However, these types of financing usually require a written business plan with a complete financial model. You can gain a better understanding of the financials of your business by creating a model. This will allow you to make informed decisions on the amount of capital to invest and what strategic goals you want to achieve in the next year.