Do you want to start a Startup? What should you know about their numbers?
In recent years, we have seen the growth of entrepreneurship worldwide, breaking records of new companies incorporated in many countries. Within this world of entrepreneurship, the ones known as Startups stand out, which are presented with technological bases revolutionizing the markets by presenting products or services in disruptive ways and at large scales focused on the needs of consumers and their shopping experience.
If you are a founder or want to found a Startup, here we are going to prepare a list of recommendations on financial management, one of the most important challenges when you have the backing of investors or even more important when you use your own means to finance your operation.
First of all, we recommend that you use a platform or administrative software such as QuickBooks Online or Xero. Remember that with these technological platforms, financial reports are generated almost in real time, connecting with your bank accounts and points of sale. Once you have your system in place, you should apply the accrual basis accounting methodology, instead of the cash basis methodology, which is the most commonly used due to its simplicity. By recording transactions in your books based on when they originate rather than when they are paid, you will unlock the tracking of your payment and collection cycles. Allowing you to have operational control and strategic vision of cash management.
Secondly, we have cash management and monitoring. The calculation of indicators such as Cash Runaway and Cash Burn is essential to understand how many months of operation you can sustain without further financing and at what rate you are investing the available cash. This is only possible by controlling the company's cash inflows and outflows and projecting them over time.
And third, taking advantage of tax deductions and tax shields. Startups commonly require initial investments and startup costs that if well documented, can allow you to lower your tax burden over the following years or tax periods. As well as financing costs, which function like any other business operating expense.
If you have or want to have a startup, get expert advice and increase your chances of success. Contact us and we will advise you at any stage of the process.