Startups require a thorough understanding of financial fundamentals. If you want to convince banks or investors that your business idea deserves an investment, important startup accounting records such the different stages of funding in venture capital as income statements (incomes and expenses) and financial forecasts will help.
Startup financials typically boil down to a straightforward equation. You have cash in your bank or you’re in debt. Cash flow can be a major issue for small businesses, and it’s essential to monitor your balance sheet to ensure that you don’t overextension yourself.
You’ll need equity or debt financing to expand and ensure that your business is profitable. Investors will typically look at your business’s plan of operation including projected costs and revenue and the probability of a return on their investment.
There are a myriad of ways you can bootstrap your business. From getting the business card that has the introductory rate of 0% to 0% period to crowdfunding platforms, there are a myriad of options. However, it’s important to keep in mind that using credit cards or debt can hurt your personal and business credit score, and you should always pay off your debts on time.
Another option is to take money from friends and family who are willing to invest in your company. While this might be a good alternative for your startup, you should put the conditions 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 the owner of your startup shares you are deemed to be an investor. Securities law is applicable to this.