Startup Basics – Financial Start-Up Basics

Startups need a firm grasp of the fundamentals of finance. If you’re seeking funds from bankers or investors, key startup accounting records like income statements (income and expenses) and financial projections will convince others that your idea is worthwhile to invest in.

The financials for startups usually are based on a straightforward formula. You have cash in your bank or you’re in debt. Cash flow can be difficult for new businesses. It is important to keep an eye on your balance sheet and make sure you don’t overextend yourself.

If you’re a new business, you’ll likely need to seek out debt or equity financing to expand your business and become profitable. Investors will usually look at your business plan along with projected revenue and costs and the probability of earning a profit from their investment.

There are numerous ways to startuphand.org/ bootstrap a startup starting with business credit cards with a 0% introductory APR to crowdfunding platforms for a brand new business. But, it’s important to be aware that using credit cards or debt can harm your personal and business credit score. You should always pay off your debts in time.

Another option is to take money from family members and friends who are willing to invest in your business. While this could be an excellent option for your startup, you should set the conditions of any loan in writing to avoid conflicts and make sure that everyone understands how their contribution will impact your bottom line. If you give someone shares in your business you are deemed to be an investor. Securities law applies to this.