Startups Need Financial Planning First
You’ve got big ideas, but how do you get there from here? Without a detailed financial plan, taking action is a gamble, but so is putting your plans on hold.
An article on Inc.com by Aron Aders provides information on how to get a realistic picture of how much your startup business will cost, so you can make wise decisions right from the start.
In addition to consulting the vast amounts of free resources available through the SBA, Aders suggests checking out a great free tool from Intuit called “Startup Financial Planner.” He lists a few principles to consider while using this helpful tool:
1. Forecasting Startup Costs
This is where you may have to curb some of your enthusiasm to take an honest, sober look at all the expenses involved. “Sugarcoating” the numbers at this stage only sets you up for failure later on, so use this time to carefully asses all your up front costs and enter them all into the planner.
2. Preparing for Year One
“After a user enters all the applicable costs into the fields as prompted, the tool generates a financial analysis that shows total costs for first year of business as well as a breakeven analysis with the specific number of months it’ll take to recoup startup expenses and ongoing costs,” Aders says.
Another excellent feature of this software is it creates reports that are easily shareable with potential stakeholders, and the tool points you to the sites you need to go—for example to register for a Federal Employment ID number, or to contact a small business accountant near you. The tool even sizes up your financials against comparable businesses in your state.
3. Heeding Expert Advice
Even while this financial planning tool is a godsend, some of the startups with the most thorough financial plans don’t end up succeeding. It’s not enough just to have numbers that look good.
Aders says you should consult with actual experts who can provide insights based on experience and a track record of success. The author recommends learning from interviews with founders of companies that have done well, like Moz, Hubspot and others.
To read the original article in its entirety, please visit Inc.com.