Startup Basics – Financial Start-Up Basics

Startups require a clear understanding of the fundamentals of finance. When you’re trying to get funding from investors or bankers crucial startup accounting documents such as income statements (income and expenses) and financial projections will help persuade others that your idea is worthy of investment.

Startup finances often boil down to a straightforward equation. You have cash or you’re in debt. Cash flow can be challenging for new businesses. It’s important to monitor your balance sheet, and not overextend yourself.

You’ll need debt or equity funding to expand and ensure that your business is profitable. Investors typically evaluate your business model as well as your projected revenue and costs as well as the likelihood of a return on their investment.

There are many ways to get a startup started including obtaining a business credit card with an introductory rate of 0% to crowdfunding platforms for a brand new business. It is important to note that the use of debt or credit cards can hurt your personal and business credit score, and you should always pay off your debt in time.

Another option is taking money from family and friends who are willing to invest in your business. While this may be the best option for your startup however, it is important to write the conditions of any loan in writing to avoid conflicts and make sure that everyone knows the implications of their contribution to your bottom line. If you give an individual shares of your company, they’re considered to be an investor and therefore need to be governed by the law of securities.

www.startuphand.org/2023/04/30/the-different-stages-of-funding-in-venture-capital