Starting a new business is an exciting venture, but it can also be daunting, especially when it comes to finances. As a startup, you need to make sure that you have a solid financial plan in place to ensure that you have enough capital to get your business off the ground and sustain it through its growth phase. In this article, the team behind Blox, the financial planning solution for startups, will discuss the top 10 things to consider when building a financial plan for startups.
1. Define Your Business Model
The first thing you need to do is define your business model. This includes identifying your target market, your revenue streams, and your business expenses. Revenue modes include Software as a Service (SaaS), Services, pay-per-transaction, and ad-based. By understanding these key factors, you can create a financial plan that aligns with your goals and vision.
2. Estimate Your Startup Costs
Once you have defined your business model, you need to estimate your startup costs. This includes everything from office space and equipment to legal fees and marketing expenses. By having a clear idea of your startup costs, you can create a budget that will help you manage your cash flow.
3. Create a Sales Forecast
Next, you need to create a sales forecast. This involves estimating how much revenue you expect to generate in the first few years of your business. By having a realistic sales forecast, you can create a financial plan that takes into account your revenue streams and expenses. Models such as Blox’s SaaS Financial Planning model can help you create this forecast in just minutes.
4. Determine Your Breakeven Point
Your breakeven point is the point at which your revenue equals your expenses. This is an important metric to consider when building your financial plan because it helps you understand how much revenue you need to generate to cover your costs. By knowing your breakeven point, you can create a financial plan that ensures your business remains profitable.
5. Decide on Funding Sources
There are several funding sources available to startups, including loans, grants, and equity financing. You need to decide which funding sources are best for your business based on your financial goals, the stage of your business, and the amount of capital you need.
6. Get good at reading your Cash Flow Statement
A cash flow statement shows the inflow and outflow of cash in your business over a period of time. By creating a cash flow statement, you can track your cash flow and make sure you have enough capital to cover your expenses. Again the pre-built SaaS Financial Planning model from Blox provides a Cash Flow block allowing you to avoid any nasty surprises!
7. Monitor Your Expenses
It’s important to monitor your expenses regularly to ensure that you’re staying within your budget. By tracking your expenses, you can identify areas where you can cut costs and improve your profitability.
8. Plan for Growth
Your financial plan should also consider your plans for growth. This includes identifying new revenue streams, expanding your customer base, and increasing your marketing efforts. By planning for growth, you can ensure that your financial plan is flexible and can adapt to changes in your business. Why not build a Subscription Revenue model for free in just minutes with Blox?
9. Hire an Accountant
As a startup, you may not have the resources to hire a full-time accountant. However, it’s important to have an accountant on your team who can help you manage your finances and ensure that you’re in compliance with tax laws.
10. Review and Adjust Your Financial Plan Regularly
Finally, it’s important to review and adjust your financial plan regularly. Your financial plan should be a living document that evolves with your business. By regularly reviewing and adjusting your financial plan, you can ensure that your business remains profitable and sustainable.
In conclusion, building a financial plan for startups is a critical step in the success of any new business. By following these top 10 things to consider, you can create a financial plan that aligns with your goals, ensures that you have enough capital to get your business off the ground, and sustains your business through its growth phase.
One important thing to remember; fundraising can take as long as 3-6 months, so make sure you build a buffer into your plan.
Many startup founders are put off by the complex or time-consuming work required to create these essential financial plans and models in spreadsheets. Blox empowers ambitious business leaders to make better, faster decisions without spreadsheets, with its marketplace of free-to-use pre-built models, which can be easily adjusted to suit your unique business. Learn more at https://blox.so/awesome