Startup Financial Planning – A Founder’s Guide

Nowadays, most investors need to see your financial plan before lending funds.

Are you planning for a startup and want to build a sustainable financial future? Well, you are at the right place, as you shall get to know various financial planning techniques that will benefit you and your startup effectively and efficiently. Budgeting, investing, and planning are fundamental to any startup, as these techniques help you maximize your resources by giving the desired results.

Nowadays, most investors need to see your financial plan before lending funds. Therefore, it becomes necessary for you to check your credit score, as well as create a business plan. To check your credit score for free, you may visit Paisabazaar’s online and web platforms and receive
monthly updates for better insights and analysis. Your high credit score can help you avail a loan for your startup at competitive interest rates and flexible repayment options.

---

Financial Planning Tips for Founders and Business Owners

Creating or drafting a robust business plan is crucial for any business or startup. Discussed below is a the complete guide that will help you explore various financial planning techniques and suggestions to execute your business model.

Maintain Healthy Credit Score

Always strive to maintain your credit score of 750 or above and as close to 900, as it increases your creditworthiness and repayment capability in the eyes of lenders. Not every startup owner wants to invest their entire hard-earned savings in the business and wait for the results.

Instead, they prefer opting for loans from private or public sector banks, NBFCs, MFIs, or other lending institutions to initiate the first phase of required funds. Therefore, to avail loans at lower interest rates and enjoy other related benefits, a healthy credit score is essential.

Create a Budget and Business Plan

Budgeting is the most crucial step for your startup. This process includes various financial activities, such as expense projection, capital-structuring, revenue forecasting, etc. Budget creation helps you plan business cash flows and assists in achieving your short-term and long-term goals.

Your business plan should contain details related to rent, planned investment to be made, information on the purchase of raw materials, goods & services, employees’ and salary details, insurance, and miscellaneous expenses.

Begin Networking ASAP

Business is all about connections and it should start with professional marketing. With the help of proactive and aggressive networking, your business could reach new heights.

In today’s world of startups, approximately 80% of people trust reviews from online customers and the rest go with word-of mouth networking methods. It is suggested to do all sorts of business networking that leverage your startup firm.

Define Your Business Model

You need to determine your business model, whether it shall cater to Peer-to-Peer (P2P), Direct-to- Customers (D2C), Business-to-Business (B2B), or any other form of business. Types of business models include direct sales, product or service-related, subscription-based, franchise, lease, rental, insurance, etc.

Further, you need to finalize the name of your startup and get it incorporated as a private limited company, sole proprietorship, partnership firm, or Limited Liability Partnership (LLP). After your startup’s incorporation, get it registered under the StartUp India scheme, initiated by Govt. of India.

Explore Funding Options

The most important task for any startup is to check out and opt for funding options available in the
financial market to run your startup, business or enterprise. Some of the most favourable funding options chosen by business owners include bank loans, self- funding, angel investors, funds from family or friends, crowdfunding, funds under the Govt. schemes, credit lines, business credit cards, etc.

Create an Emergency Fund

An emergency fund is commonly referred to as a contingency fund in which you are required to keep aside 10-20% of your budget for unexpected expenses or unforeseen circumstances.

There are multiple types of uncertainties faced while running a startup by most business owners, such as supply-demand imbalances, startup regulations, consumer demand, trade policies, cybersecurity issues, regulatory changes, etc.

Start with Initial Promotions and Discounts

To boost your business volume and enhance its reach, you shall start with promotions by offering discounts, cashback, coupons, scratch cards, etc. to new and existing customers on your newly launched products and services.

This technique increases the market presence, which eventually leads to repeat customers. You can also initiate various incentive programs for your customers to increase the business volume and market share.

Financial planning is a continuing process that requires consistent adjustments as your business grows and market conditions change. You must periodically revisit and revise your financial plan as per the market condition and circumstances to stay aligned with your business goals.