Startups carry significantly more risk than a long-standing, well-established business. If finances are not handled with the utmost care and attention, it won’t take long for the entire business to crumble.
It sounds dramatic, but in the eyes of investors, a startup that has a firm grip on its finances will be far more successful in securing funding than one that doesn’t. And this funding is often crucial when taking a startup to the next level.
Enter, financial forecasting.
This is the key to unlocking financial security and funding for your startup. Every single startup should be doing it, and if you’re a startup business owner and you’re not, now is the time to start.
Let’s delve into why it’s so important.
Financial forecasting is the process of estimating your startup’s future financial outcomes, including revenue, expenses, cash flow, and balance sheet.
It provides a roadmap for the financial journey of your business and helps you make informed decisions about what to do next.
For example, forecasting can predict a company’s future financial performance based on historical data, market trends, and various assumptions. This data is also essential to gather before you even think of approaching an investor.
Financial forecasting holds immense importance for startups for several reasons. It serves as a strategic and operational tool that helps these newly established businesses plan, adapt, and thrive in a competitive and uncertain business environment. Here’s a detailed explanation of why financial forecasting is crucial for startups:
Now we understand why you need financial forecasting, let’s take a quick look at the different types of forecasting:
One of the biggest challenges for startups is the lack of resources to effectively carry out financial business functions. Many don’t employ financial experts such as a CFO or accountant because overall, there is not enough work to sustain a full-time employee.
The consequence of this issue is that startup owners try to tackle financial forecasting themselves. However, without a professional financial background and expertise, this opens the door wide for mistakes and errors to be made.
Ultimately, if you don’t have a correct view of your finances, this makes it impossible to make informed decisions. Any decisions you do make will be based on incorrect figures and can lead to far bigger problems further down the line.
There is a solution that allows you to take advantage of all the benefits of financial forecasting without having to hire an in-house accountant or finance professional.
Outsourcing is fast becoming the most popular way for startups to gain access to professional financial services. At Finvisor, we specialize in providing these services – including forecasting – to startups and young or small businesses.
Best of all, outsourcing means you only pay for the services you require making it a highly affordable way to get the help you need.
Take your business to the next level with financial forecasting and let Finvisor handle it with professional ease. Get in touch with our team to understand more. We provide a whole range of services including accounting, bookkeeping, HR, employee benefits, and more.
To learn more about what we do, or to request a quote, contact us at firstname.lastname@example.org or 415-416-6682. We’re here to help you navigate deferred revenue journal entries so you can make the most of your assets!
*This blog does not constitute solicitation or provision of legal advice and does not establish an attorney-client relationship. This blog should not be used as a substitute for obtaining legal advice from an attorney licensed or authorized to practice in your jurisdiction.*