Fundamentals of financial startup are the ones that every startup should know to ensure their financial health and secure the funds they require to expand. Without these basics nine out of 10 startups fail. The reason is simple – cash flow. Without a clear understanding of how to monitor and forecast cash flow, a startup will not be able to manage its budget or invest in growth.

Important startup accounting records such as income statements (revenue and expenses) and financial projections are crucial to prove the viability of your business plan to investors. These models must be calculated carefully to accurately reflect your company’s economics. This includes easy-to-forget costs like shipping, taxes and insurance, payment processing fees and utility costs.

In the beginning startups may be able to get financing from family and friends if more traditional lenders aren’t an option. But, in this case it’s crucial to set the terms of any loan in writing so that there are no conflicts over repayment obligations or expectations for future performance.

Startups can also look for venture capital from private investors or crowdfunding platforms such as Kickstarter. However, these kinds of financing typically require a written business plan with a complete financial model. You can better understand the financials of your business by creating a model. This will allow you to make informed decisions on the amount of capital you can invest and what strategic goals you want to achieve in the next year.

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