Steve Case, AOL founder and venture capitalist, is convinced the future of American startups lies outside of Silicon Valley. In April, he’ll head to Florida and Puerto Rico to prove it.
You had a great idea that solves a huge problem many people have. You thought to yourself, “I’m going to solve this and make this problem go away”! You drew up a business plan, picked up the phone and lined up suppliers and business allies, got your spouse’s support, and BOOM! You did it! You are now an entrepreneur.
Despite accounting’s boring reputation, however, it can’t be emphasized too much how essential it is that your business follow accounting’s best practices right from the start. In fact, financial mismanagement is an oft-cited reason for business failure. An influential study by CB Insights of 101 failed startups found that cash flow was the No. 2 reason why some of those small businesses failed, and was second only to businesses trying to sell a product that their market didn’t need.
So, whether you’re a bootstrapped startup or you’ve secured funding, pay very close attention to proactively managing your business’s cash as it ebbs and flows. That kind of attention is vital for both long and short-term success.
Doing it right from the get-go!
Building a strong and accurate foundation is an absolute investment in your business success. From selecting the right accounting software to understanding the stories behind your financial reports, an experienced accounting professional can provide the guidance you need to help you make the right decisions. You are good at what you do, and you want to nurture it with your time and energy. So why won’t you hire a professional and let them take care of the accounting for you? Investing in your accounting and finance function from the beginning will save you a lot of stress, time and money down the road. It’s an investment that will prove valuable as you grow and build your legacy.
Don’t let growing pain stop you!
Your business is taking off and you are making a name for yourself. Customers want more of what you offer, and investors want in as your business partners. On top of that, you can’t keep doing the job of a 3-person team anymore. You need to hire! Growing pain is a necessary part of the growing process but it doesn’t have to be stressful if you make the investment at the beginning. If your accounting and finances are in order, you will be able to strike while the iron is hot by producing timely AND accurate financial statements to investors. Accurate financial information can also help you dial into your cash flows patterns, determine pricing, evaluate how big of a team you need to build and how much to pay them. Your early investment in accounting will deliver the vital information to you so that you can decide on the right commitment to make in this crucial phase of your business.
Key to Your Legacy!
Investing in a strong accounting function is one of the best ways to create value in your business. It shows that you are a goal and growth-oriented business owner and sets yourself apart from your competition. Business owners who invest in building a strong accounting function are often able to maximize the value of the business and reap dividends at the time of exit. This is because the business has good cash flows, effective internal controls, timely AND accurate financial information, audited financial statements and strong financial leadership. Your CFO should be able to quarterback your exit planning process by gathering a team of professionals to help you mitigate tax impacts of the transaction, wealth preservation and transfer, asset protection and charitable giving, etc. Finance and accounting professionals have a knack in understanding and assessing the capabilities of other professionals. They are often more conservative, level-headed, complimenting the skillsets of the business owners.
No matter what type of business you run, never underestimate the importance of employing accounting best practices for your business from the very start. This may not seem like the top priority in the early stages of your startup, but as your business grows and demands more of your time, effective accounting and cash-flow management structures will become critical to your business’ ability to scale.
At CFO Connections, we are entrepreneurs with 20 years of accounting and finance experience. We feel the excitement and growing pains you feel because we’ve been there. We know that entrepreneurs at different stages of their business often invest differently in their accounting functions. Therefore, we have options for you to choose from that best compliment your desired level of investment. Make the investment right now and watch your business reap its benefits in the years to come.