The financial complexities involved in starting a business from scratch can be overwhelming. Understanding the fundamental terms of finance used by startups will allow you to make educated decisions and efficiently manage your resources.

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

Revenue and Costs: Monitoring and tracking operating expenses, revenues as well as other costs is a vital part of financial startup foundations. This process helps startups manage customer acquisition, customer turnover, and revenue growth. It also helps them understand the impact of pricing for customers products, features of the product, and other factors on their bottom line.

Financing: Startups typically rely on personal loans or credit cards to finance their operations. This option can be costly and risky for new businesses, especially in the event that the business fails to pay its repayment obligations. Alternative sources of financing for startups include business lines of credit, equipment leases, and crowdsourcing platforms.

Cash Flow: Startups need to be able to forecast its cash position at any time. This is a problem for startups who bill each year or in arrears, based on usage. They are unable to give an accurate picture of their financial situation over time. Startups can prevent cash flow issues by streamlining the payment process and ensuring vendor payments are made promptly and accurately recording ownership equity.

www.startuphand.org/2021/12/17/financial-startup-basics-fundraising-tips/