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Financial Startup Basics

Financial complexity can be overwhelming when beginning the business. Understanding the fundamental terms of finance used by startups will allow you to make educated decisions and effectively manage your resources.

Basic Bookkeeping: Accurate records are the core of financial planning. It is essential for any startup hoping to secure funding from investors or lenders. This includes GAAP conforming financial statements (income, expenses) as well as cash flow and the balance sheet.

Revenue and Costs: Tracking and monitoring the amount of revenue, operational expenses as well as other costs is a vital part of financial startup basics. This helps startups control customer acquisition, turnover and revenue growth. It helps them understand how customer pricing as well as product features and factors impact their bottom line.

Financing: Many startups depend on personal loans as well as credit cards to fund their operations. This option can be costly and dangerous for startups, especially if the company fails to meet repayment obligations. Alternative funding options for startups include business lines of credit equipment leases, business lines of credit, and crowdsourcing platforms.

Cash Flow: Startups must to be able to predict their cash position at any point in time. This can be a challenge for startups who bill annually or in arrears, based on the usage. They aren’t able to provide an accurate view of their financial standing over time. Startups can prevent cash flow issues by streamlining the payment process by ensuring that vendor payments are made in a timely manner, and accurately recording ownership equity.

www.startuphand.org/2020/09/09/financial-startup-basics-by-board-room/

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