Startups must have a solid understanding my company of the financial basics. 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 can convince others that your business idea is worthwhile to invest in.
Startups’ financials often are based on a simple formula. You either have cash or you’re in debt. Cash flow can be a challenge for businesses that are just starting out and it’s important to monitor your balance sheet to ensure that you don’t overexert yourself.
You’ll need debt or equity funding to grow and make your business profitable. Investors will review your business plan, your projected revenues and costs, and the likelihood of getting a return on their investment.
There are many ways to start a business, from getting business credit cards with the introductory rate of 0% to crowdfunding platforms for a new business. It’s important to remember that the use of credit cards or debt can have a negative impact on your credit scores. It is essential to make sure to pay your debts on time.
Another option is to get money from family and friends who are willing to invest in your company. This may be a great option for your business, however you should always put the terms of your agreement in writing to avoid conflicts and make sure everyone understands what their contribution will impact your bottom line. If you give someone shares in your business, they are considered an investor. Securities law is applicable to this.
