https://startuphand.org/2020/05/08/financial-startup-basics-for-business-owners/
The financial complexities can be overwhelming when starting the business. Understanding key startup financial terms will allow you to make informed decisions and efficiently manage your resources.
Basic Bookkeeping: Accurate records form the core of financial planning. It’s essential for any startup looking to obtain funding from lenders or investors. This includes GAAP-compliant financial statements (income and expenses), cash flow, an account of balance, and financial projections.
Revenue and Costs: Monitoring and tracking operating expenses, revenues as well as other costs is an important part of financial startup basics. This process aids startup founders control customer acquisition, turnover, and revenue growth. It helps them understand how pricing of customers products, features, and other factors impact their bottom line.
Financing: Startups typically rely on personal loans and credit cards to finance their operations. This option can be costly and risky for startups, especially when the company fails to fulfill its repayment obligations. Alternative sources of financing for startups include business line of credit, equipment leasing, and crowdsourcing platforms.
Cash Flow: Startups need to be able to forecast its cash position at any given time. This isn’t easy for startups that charge annually or in arrears on the basis of usage, which aren’t able to provide a precise picture of their cash balance over a time. Automating the payment process, ensuring vendor payments are received on time, and accurately registering equity ownership can help startups avoid cash flow issues.
