Starting a new business is an exciting yet challenging time. As an entrepreneur, it can be tempting to focus solely on things like developing your product, marketing, and sales. However, laying the right financial foundations early on is crucial to setup your startup for sustainable success.
Here are our top financial tips for maximizing your chances as a new business:

Create Financial Projections

Financial projections forecast your expected revenues and expenses over the next 3-5 years. It forces you to dig into the numbers and better understand what it will truly cost to get your business off the ground. Being equipped with projected cash flow statements and income statements helps guide smarter financial decision making.

Manage Cash Flow

Diligently Cash flow indicates the amount of cash coming in vs. going out of your startup each month. Frequently tracking cash flow helps you identify low points where you may struggle to pay expenses. Building at least 6 months reserve cash gives you a buffer for the early unpredictability most startups face before profitability.

Establish a Budget

A detailed budget allocates how much you plan to spend on business items and operations each month. This includes things like payroll, inventory, supplies, software, marketing costs, taxes, etc. Monitor your actual spending to stay aligned. Tight budget management is vital.

Keep Your Personal and Business Finances Separate

As a new entrepreneur, one of the biggest mistakes you can make is mingling personal and business funds. Always keep these finances completely distinct right from the start. Personal cash injections into the business should be formally tracked as loans or owner investments.

Review Tax Requirements

Most small businesses structure themselves as pass-through entities like LLCs, which means self-employment taxes apply. Understand clearly what federal and state tax registration, filing, deductions, and obligations apply to your startup. Implement the right accounting processes early on.