Startups need a firm grasp of the fundamentals of finance. When you’re trying to get funds from bankers or investors crucial startup accounting documents like income statements (income and expenses) and financial projections will convince others that your idea is worth investing in.
Startup financials usually boil down to a simple equation. If you have cash, or you are in debt. Cash flow can be a problem for small businesses, and it’s vital to monitor your balance sheet to ensure you don’t overextend yourself.
If you’re a new business you’ll most likely have to seek out equity or debt financing in order to grow your business and ensure it is profitable. Investors will typically look at your business plan as well as your projected revenue and costs as well as the likelihood of earning a profit from their investment.
There are many ways to get a startup started such as obtaining an enterprise credit card that offers APR that is 0% to crowdfunding platforms for a brand new business. It’s important to remember that using credit cards or debt could negatively impact your personal and business credit scores. It is important to pay your debts in time.
Another option is to get money from friends and family who are willing to invest in your business. While this might be a good option for your startup but you should make sure to write the conditions of any loan in writing to avoid conflicts and ensure that everyone knows what their contribution will mean for your bottom line. If you offer someone shares of your startup they’re considered an investor and therefore need to be governed by the law of securities.
www.startuphand.org/2020/09/09/financial-startup-basics-by-board-room/