The goal of any business is to make money. Otherwise, you just have a hobby (which is also OK!). But if your goal is to run a business, knowing what you'll need to start up and how to manage cash flow once you have it will be integral to your success. Although it's hard to get a definitive list of reasons as to why most businesses fail, cash flow and insufficient capital are frequent culprits.

There are two sides to this coin: financial literacy and securing funding (if it's needed). Let's start with the first one. There are plenty of businesses you can start with minimal startup costs, but others will require money for inventory, equipment, or physical space. A clear view of your total investment—before you spend a cent—is a must for helping to make important projections, like when you’ll break even.

Where the money ends up going will largely be determined by your business, but our research shows that for most businesses, product and inventory costs represent a large share of spend in Year 1. If those calculations show you’ll need more funding than you can afford to spend out of pocket, you can look at options like a small business loan, a Shopify Capital offer (for those qualified), or a crowdfunding campaign.

The second part of the equation is financial literacy, or understanding the flow of finances through your business. Remember, if the math doesn't work, your business won't work. Bookkeeping needs to be one of your primary financial tasks as soon as you’re ready to start making purchases for your business. Accurate records of your income and expenses will help you keep an eye on cash flow and make for a smooth transition to working with an accountant or bookkeeper later on—when you're able to afford professional help in these areas, it's some of the best money you invest.

To make managing your finances far easier, take the time to open a business bank account and obtain a business credit card. Keeping your personal and professional finances separate makes doing your business taxes much simpler and can help you automate some of the financial steps to starting a business as well.