Financial Planning for Startups
As a startup, it’s easy to get caught up in the day-to-day tasks and forget about the bigger picture. However, establishing a financial plan for your startup company will help your business be successful in the long run. The most significant benefit of financial planning is that it can help you make informed decisions about where to allocate your money so that you can set goals and track your company’s success.
Things to Keep in Mind When Financial Planning Your Startup
First and foremost, it’s essential to have a clear understanding of your company’s revenue, expenses, and cash flow. Having this information on hand will make setting realistic financial goals for your business easier. These goals should be specific, measurable, and achievable with some flexibility to make any necessary adjustments along the way. It’s also a good idea to have a solid understanding of the different financing options available to startups – for example, traditional bank loans vs. venture capital. Knowing your options will help you choose the best financing solution so that you can factor that into your financial plan for your startup company.
How to Make a Startup Financial Plan
Visualize Your Goals
A good starting point for creating a financial plan for your startup company is to determine your company’s KPIs. This will also include forecasting and projections as well as your key milestones for your business. Maybe one of your business goals will consist of acquiring a certain number of customers or making an acquisition in a few years. Remember that goals and metrics could be different based on your business model.
Use the Right Template
When creating a startup financial plan, it’s important to use a template that matches your business model so you can personalize it to fit your business goals. There are many kinds of software that creates a template for you to make this process easier.
Import Existing Data
Importing your existing information from different financial accounts like QuickBooks will allow you to pull as much data as possible so you have the clearest, most detailed picture. You should import the following:
- Assets (checking, savings, inventory)
- Liabilities (line of credit, amounts owed to vendors, payroll taxes)
- Equity
- Income
- Expenses
Project Expenses
Once you have an accurate picture of current accounts, you can start projecting future expenses for your startup company. This can include employee salaries and benefits, administrative expenses, office equipment and software, hosting fees, product costs, capital purchases, etc.
Examine Your Financial Plan
Review your finished financial plan to ensure your projections are accurate, and your goals are attainable. It’s also a good idea to review your financial plan for your startup company every quarter in case you need to make any tweaks due to changes in your business or the economy.
An Advisor Can Help with Financial Planning for Startups
If you need help figuring out where to start with financial planning, consider hiring a company that does advisory and consulting services. At JTS Associates, our team brings great experience across industries to help you achieve your organizational goals. Contact us today at (516) 877-5900.
