Startups need a firm grasp of the fundamentals of finance. If you want to convince banks or investors that your business idea is worthy of investment, the most important financial records of a startup such as income statements (incomes and expenses) and financial forecasts will aid.
Financials for startups often are based on a simple formula. You either have cash or you’re in debt. Cash flow can be a struggle for young businesses and it’s crucial to monitor your balance sheet to ensure that you don’t overextend yourself.
If you’re a new business you’ll probably need to find equity or debt financing to expand your business and make it profitable. Investors will look at your business plan, your projected revenues and costs, and the likelihood of getting a return on their investment.
There are a variety of ways to get a startup started including obtaining a business credit card with APR that is 0% to crowdfunding platforms to help a new business. It’s important to remember that the use of credit cards or debt can have a negative impact on your personal and business credit scores. You should always make sure to pay your debts on time.
You can also borrow funds from family and friends who are willing to invest. While this might be the best option for your startup however, you must put the conditions of any loan in writing to avoid conflicts and make sure that everyone is aware of what their contribution will mean for your bottom line. If you give an individual shares of your business they’re considered to be an investor, and thus need to be governed by the law of securities.