Basics of financial startup are the essentials that startups need to be aware of to ensure financial health and secure the funds needed for growth. Nine out of ten startup failures are caused by an absence of these basic elements. Cash flow is the primary reason. A startup that doesn’t know how to monitor and forecast cash flow will be unable manage its budget, or invest in growth.
Investors must be aware of your startup’s financial projections and income statements. These models need to be carefully calculated in order to accurately reflect your company’s economics. This includes easily overlooked costs such as shipping, taxes and insurance, processing fees for payments and utilities.
If traditional lenders aren’t available family and friends may offer financing to startups in the beginning. In this scenario however, it’s important to have any loan terms written down to ensure there are no conflicting the repayment obligation or future performance expectations.
Startups can also search for venture capital from crowdfunding platforms or private investors like Kickstarter. These types of funding typically require a business plan, which includes a detailed financial forecast. The creation of a model will allow you to gain a better understanding of the financials of your company, allowing you to make informed decisions regarding the amount of capital you need and what strategic goals you’d like to achieve by the end of next year.