When launching a startup, just about the most daunting tasks is maintaining your financials. Yet, it really is just about the most important duties for a startup, especially those in the high-growth stage.
If you’re on the right track to be more when compared to a mom-and-pop shop, it’s necessary to have a high-quality, accountable financial platform to effectively monitor the fitness of a business, fuel business decisions and open your company up to growth capital. And I’m not only discussing asking your awesome bookkeeper to defend myself against extra hours. That is serious. If your goal is to grow really fast, you will have to generate the big guns.
Listed below are four ways to make sure your startup’s finance solution doesn’t slow you down:
1. Turn to the professionals. While a full-time CFO will not be required today, high-growth companies can benefit immensely from hiring a financial consultant or asking an engaged board member with strong finance background to chip in. This outside help can be imperative for newly launched companies, since it enables them to rapidly identify and react to warning flag and ensure they’re on the right course.
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When you have someone on your own radar, you must suss out their capabilities. They should proactively make sure that all underlying financial details accurately support and explain the top-level numbers. Because without numbers to prove your traction, investors won’t pour capital right into a startup nor will companies want to obtain your company.
Having a solid financial leader set up to keep a constant, clear and clean picture of an organization’s finances can help establish you for maximizing the worthiness of a business.
2. Embrace technology.
Small accounting packages are excellent so you can get your feet wet in startup land, but companies can outgrow them quickly. While, fresh but scaling startups have a tendency to drag their feet until they see clear proof issues, prolonging upgrading could cause unnecessary and costly headaches like missed billing opportunities, inventory write-offs, efficiency gaps in operations as well as fraud.
Searching for a fix once a problem emerges could take months to judge and implement, resulting in more lost revenue. Don’t wait to purchase a financial technology solution, as the costs will outweigh the short-term savings.
There are various scalable cloud-based financial solutions open to growing companies at price points that will not break your budget, like Intacct and Netsuite.
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3. Think as an investor. While on an instant growth trajectory, companies relish the chance showing investors why their business is best. Yet, the investment community is often bombarded with a wide variety of financial formats, they need to rework information to make any sense.
If the intent is to secure growth capital, make certain you’re on a single page as investors. For example, switching from cash-based to accrual-based accounting could be pick. Transitioning from a way that records revenue and expenses when cash is exchanged to 1 where revenues and expenses are tracked because they incur, provides more in-depth information to investors, like future revenue predicated on credit.
4. Concentrate on the future. Many small companies only produce financial statements that permit them to look back at what happened previously. As with worries, looking backward when in the years ahead is not a highly effective or safe way to see what’s coming.
Accurate forecast information — showing where in fact the organization is headed from a cash and operational perspective — is crucial for executives to create decisions also to gauge performance. If you cannot clearly see where you’ll be financially in 30 to 3 months, you will lack the opportunity to address potential problems.
How many other tips have you got for maintaining your financial information in balance? Tell us in the comments below.