When you first begin your tech startup, you’re full of passion and excitement, mixed with, most likely, the fear of failure. With that cocktail of emotions going on, it can be hard to step back and take an objective dive into the financial side of your business. But it’s necessary to be aware of your what your finances look like when you’re starting your own tech company.
Five financial problems that tech startups face can be solved with outsourced accounting services. But before you can solve these problems, you first need to be aware of the dangers of rushing into starting your company without a clear view of financial problems that could arise.
When you’re starting your company, cash flow can be a huge issue. How are you balancing your income and expenses? Will your company be profitable? How can you support it until it is profitable? Do you know how to run the daily finances involved with a tech startup?
Cash flow is crucial to a well-running business. You need to be able to support the hardware that you need to buy, office space, or employees. But before you can start finding investors or other means of increasing your cash flow, you first need to have a handle on what your finances actually look like. Outsourced accounting services can help you dive into your finances and understand what the future of your company looks like and how you can get there.
Lack of Financial Planning
Where will your company be in five years? I’m sure you have at least a few goals for where your company will be, where it will end up, and how it will get there. But what will your finances look like in five years? Do you know what strategic moves to make in order to increase profits?
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Too often entrepreneurs get caught up in the magic of starting their own business and forget to plan ahead in terms of their finances. How many days of cash flow do you have on hand? What is your approach to mergers and acquisitions? Where are the financial challenges that you’ll face?
Before you dive into your dream of running your own business, do a thorough audit of your market, taxes, and your competitor’s business plans. Talk with mentors about what financial challenges they faced and how they overcame them.
Plan out at what income level you’ll be able to hire more employees. At what point is your business profitable and self-sustainable? How will you attract and incorporate investors? You need to consistently and accurately track financial data so that you can raise red flags when needed.
No Dedicated Finance Team
Too often it’s the CEO who winds up taking care of the financial side of the business. On top of providing leadership, managing business decisions, and running the everyday of a tech startup, now he/she has to fully understand and implement financial decisions. Most often, the CEO isn’t an expert in finance and is better suited to vision, leadership, and business development. This can be a huge problem for a tech startup.
A dedicated finance team provided by outsourced accounting services has the time to focus solely on your tech startup’s finances. Financial issues can shut down your company before it even gets off the ground. Your finance and accounting are crucial to your business and deserve a dedicated team. Without a dedicated team, it’s too easy for potential issues to sneak by unnoticed as the CEO attempts to find time in the day to handle everything.
Accommodating Rapid Growth
When a tech startup finds its niche market, things start happening quickly. You can sell out, grow faster than you had planned for, or quickly find yourself needing to hire new employees to handle the demand. As money flows in faster than you expected, it’s easy to become overzealous and lose your head.
As demand increases so do your expenditures if you’re going to keep up. Competitors may start to encroach on your territory and the day only gets busier. Don’t let your finances slip by you unnoticed. With rapid growth, you often become too busy to keep up. And if you don’t keep on top of your F & A you can find yourself stuck with too many employees for your income or forgetting to budget in things like rent.
Outsourced accounting services help you scale in accordance with your finances. Grow too quickly and you’ll find yourself going under. Grow too slowly and you’ll never make progress towards your goals.
No Experience with High Stakes Financial Decisions
Imagine the day when your tech startup has experienced rapid growth and is now a successful business. Now you’re approached about a buy-out. You could stand to make a lot of money in a deal like that- or lose it too.
If you don’t have the right experience -or very limited experience- in making huge financial decisions like this one, then you could wind up losing more than you had hoped for. In high-pressure situations like a merger or acquisition negotiation, it’s easy to find yourself making the wrong deal.
With outsourced accounting services you’ll have access to a virtual CFO with the experience to guide you through intense negotiations. They’ll be able to stop you from making a deal you’ll regret – and help you to make a great one instead.
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Avoid Financial Pitfalls with Outsourced Accounting Services
Global Shared Services offers outsourced accounting services for tech startups for a reason. We believe that your tech startup should be able to access the expert help you need so your business can succeed.
Avoid issues like high costs, over-hiring, and inaccurate service. With GSS, you’ll get reliable expert financial advice including access to cutting edge technology and full service solutions. We develop custom solutions, so you can scale your technology company accounting and financial solutions you can trust.
If you need access to financial experts, talk to us today.
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With GSS, we meet our franchisor requirements on time and with accuracy. The local CPA could not handle our volume. We are so happy to have made the change. GSS knows our business and our franchisor requirements.Multi-unit fast sandwich Owner