Startups need to have a good grasp of the financial basics. If you wish to convince investors or banks that your business idea is worthy of investment, crucial accounting records for startups like income statements (incomes and expenses) and financial forecasts can be helpful.
Startup financials often come down to a single equation. You either have cash on hand or you’re in debt. Cash flow can be a challenge for new businesses and it’s important to keep an eye on your balance sheet so that you don’t overextend yourself.
As a startup you’ll most likely have to find debt or equity financing to expand your company and ensure it is profitable. Investors typically consider your business plan including projected costs and revenue and the probability of earning a profit from their investment.
There are many ways to help you bootstrap your start-up. From getting business cards with a 0% APR introductory period to crowdfunding platforms, there are a myriad of options. It is important to keep in mind that using debt or credit cards can hurt your personal and business credit score. Therefore, you must always pay off your debt on time.
You can also borrow funds from friends and family members who are willing to this page invest. This is a good option for your business, but you should always write the terms of your agreement in writing to avoid conflicts and make sure everyone is aware of what their contribution will be affecting your bottom line. In addition, if you give the recipient shares in your company they’re considered to be an investor and therefore need to be governed by securities law.