Startup Basics – Financial Start-Up Basics
Startups require a clear understanding of the fundamentals of finance. If you’re trying to convince banks or investors that your business idea deserves investment, the most important startup accounting records such as income statements (incomes and expenses) and financial forecasts can be helpful.
Startup finances often boil down to a simple equation. You have cash in your bank or you’re in debt. Cash flow can be a problem for young businesses and it’s crucial to keep an eye on your balance sheet so that you don’t overextension yourself.
You’ll need equity or debt funding to grow and make your startup profitable. Investors will be looking at your business plan, the projected revenue and expenses, and the likelihood that they’ll get a return on their investment.
There are many options to start a business including obtaining the business credit card that has APR that is 0% to crowdfunding platforms to help a new business. But, it’s important to keep in mind that using credit or debt could harm your personal and business credit score. You should always pay off your debt in time.
Another option is to borrow money from relatives and friends who are willing to invest in your business. While this is an ideal alternative for your startup however, you must put the terms of any loan in writing to avoid conflicts and ensure that everyone understands the impact of their contribution on your bottom line. If you give an individual shares in your company they are considered to be an investor. Securities law is applicable to this.