Just like life, your startup company also needs a steady and consistent pulse. That pulse is your accounting department and methods. And it's one of the biggest pain points you'll need to tackle as the founder of a startup.
If accounting is the pulse, cash flow, expenses, budgeting and income is the blood and internal organs. The tempo of your business' pulse â€” how well your blood is pumping â€” is also the perfect gauge to how your business is performing.
And like any good health examination, there are plenty of tools to let you know how your startup is performing.
The Importance of Organizing Accounting Functions
Somewhere in your piles of paper, there is information about your debts to others and what those others owe you. Think of this as the most basic of health tests. By staying organized on when payments are due and making sure you've collected from all of your clients is of utmost importance.
As a startup, more is expected out of you in terms of paying on time â€” sometimes even early â€” and you don't want to get off on a bad foot with your vendors and customers. As far as organiztion is concernend, might not hurt to find yourself a solid accounting software that you can use to streamline the daya to day functions of your business accounting.
Make sure you have someone on your team in charge of all money coming in and all money going out. This information will help paint a better picture of your startup's profitability.
Monitor Your Accounting To Avoid Drain
Bouncing off the last point, by keeping an eye on your cash flow â€” let's call it your water intake (the body needs plenty of water!) â€” you can avoid from dehydrating. In other words, crashing and burning.
Strong accounting can help you cut costs by identifying areas where money is coming from and going to.
Eliminating expenses just doesn't mean cutting items from the budget that you think you can live without â€” do you really need to pay for cable TV in the office? â€” it also means looking for the best deals and special offers out there.
Start with your credit card(s). Are you paying an annual feel? If so, what are you getting for that? Do you have a solid rewards program? Is your business benefitting from those rewards?
A strong accounting department has a nose for these types of things. They look for the rebates that pull your business toward profit and manageable costs.
Acclimate To Business Climates
You know drinking water is important, but did you know that, let's say, when you go to a city at elevation, like Denver, you need to drink more water. This is a lesson that no matter how positive or concerning your cash flow is, you need to acclimate to what business throws your way.
The top rule you can understand is that you should never count on your existing cash flow to keep you afloat. Be prepared to make some big decisions and evolve your cash flow over time. Like a weatherman, a solid accountant should be able to help forecast how you need to adapt.
By having that forecast in front of your nose, you can better assess the overall health of your business over a period of time.
Get the Most Out Of your Great Accounting
If you're a smart businessperson, then make sure to reward yourself by getting the most out of your profits. Continue staying feisty when it comes to discovering new profits, unnecessary expenses and forecasting when times will not only be bad, but also good.