Startup Basics – Financial Start-Up Basics
Startups must have a firm grasp of the basics of finance. When you’re trying to get funds from bankers or investors essential startup accounting records such as income statements (income and expenses) and financial projections will aid in convincing others that your business idea is worthy of investment.
Startup financials often come down to a single equation. You have cash in your bank or you’re in debt. Cash flow can be challenging for young businesses. It’s essential to watch your balance sheet and be careful not to overextension yourself.
As a start-up it is likely that you will need to find debt or equity financing to expand your company and become profitable. Investors will review your business plan, your projected revenues and costs, and the likelihood that they’ll get an investment return.
There are many ways to help you bootstrap your business. From getting business cards with the introductory rate of 0% to 0% period to crowdfunding platforms, there are many options. However, it’s important take note that the use of credit or debt could impact your personal and business credit score, and you should always pay off your debts promptly.
Another option is to borrow money from relatives and friends who are willing to invest in your company. While this could be a good option for your business however, you must write the terms of any loan in writing to avoid conflicts and ensure that everyone is aware of the impact of their contribution on your bottom line. If you give the owner of your startup shares and they become an investor. Securities law applies to this.
