Financial Startup Basics

The financial startup basics are the fundamentals that startups must have a firm grasp of to ensure their financial health and secure the funds needed to grow. Nine out of ten startup failures are due to insufficient knowledge of these vital elements. The reason for this is simple – cash flow. 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 the financial projections of your startup as well as income statements. These models should be carefully calculated in order to accurately reflect your business’s economics. This includes easy-to-forget costs such as shipping, taxes and insurance, processing fees for payments and utilities.

If traditional lenders aren’t available family members and friends can help startups with financing in the early stages. However, in this situation it is crucial to write any loan terms in writing to ensure that there aren’t any conflicts over repayment obligations or expectations for future performance.

Startups can also seek out financial startup basics venture capital from an individual investor or crowdfunding platforms such as Kickstarter. These types of funding typically require a business plan, which includes a thorough financial forecast. A model can help you to gain a better understanding of the financials of your business, allowing you to make informed choices about how much capital you need and what strategic goals you want to achieve by the end of next year.