3 finance and accounting ideas for bootstrapping startups

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In my previous article, I talked about some finance and accounting factors that you need to look into before actually starting up. Carefully considering those financial aspects can save you money as you make your next steps.

One of the most crucial parts of starting up is executing your go-to market strategy. There’s nothing more important than bringing the heat up from the very start of your business to keep it running smoothly.

But while it’s important to make sure that the operations and the strategies are working out according to plan, don’t lose sight of the financial side of your business.

Here’s another three aspects to consider:

Full-time or outsourced finance guy?

It’s better to decide on this matter as early as you can because making sure that someone is keeping track of all the finances from day one strikes out one worry for a busy entrepreneur like you.

The choice is a matter of cost-benefit analysis and right selection. Vetting talent and service providers is key.

Hiring a full-time finance professional can be more costly since you have to pay a salary, something that a bootstrapping startup might find challenging. But one benefit of hiring is that the fee is fixed and the employee can be more flexible in helping you with other business needs. It makes sense especially when company transactions are expected to be voluminous or if you want some kind of control over all your financial records.

On the other hand, outsourcing a financial service can be a cheaper option but it depends on the volume of transactions. What’s good about outsourcing is there is a pool of talent that can work on certain tasks on a per contract basis. Some outsourcing companies also have a broader knowledge on business processes which makes things easier.

Choosing your KPIs

Key performance indicators (KPIs) are generally broken down into three categories: financial indicators, non-financial indicators, and mixed indicators. Finding the right indicators from day one allows you to better measure your business’ performance at the end of the first month.

Financial indicators literally use numbers gathered from your financial records or statements. This can be as easy as setting a sales target, a net income target, or an asset turnover ratio. Selecting the right indicators needs serious thinking about your business goals and strategy.

Non-financial indicators are operational data, or simply, information outside your financial records. Depending on the nature of your business, it can be your churn rate, customer conversion rate, or business development pipeline. There are tons of non-financial KPIs that you can use, but only the right indicator makes sense to be your goal.

Mixed indicators are the combination of both financial and non-financial indicators. These can be your cash burn rate, sales per customer, or ratio of value-added. These are more sophisticated KPIs which need to be tailored for each individual company.

Keeping a management report

While you know that there’s an accountant doing your external financial reporting, don’t forget that such a report is rules-based. You don’t want that information for decision making; you want it tailored specifically for you.

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