Finance Tips for Startups: 6 That Will Make a Difference for Your Business!

Carrying out the financial management of a company is already quite challenging. In the case of startups, which are companies that tend to grow faster than other businesses, this management requires even more attention.

Timely control of the business finances of this model is essential to monitor the company's development, its invoicing, find ways to reduce costs, and, above all, to have accurate data to present to potential investors.

With up-to-date financial information, the startup gains a competitive advantage, increases the chances of raising funds, reduces unnecessary expenses, and manages to make smarter investments in areas that positively impact its growth.

In this article, you'll check out 6 startup finance tips that will help you achieve these and similar results. Follow up!

Preparation of a good business plan

Good startup management must start with the elaboration of a complete and structured business plan.

This document should include points such as the company's value proposition, customer segments, activities that will be developed, cost structure, among others.

Regarding the financial part, it is essential to include in this planning the initial costs, estimated expenses, recurring and occasional expenses, the amount needed to maintain a good cash flow, etc.

Record of all financial transactions of the company

Another action that cannot be missing from the list of financial tips for startups is recording all the company's movements.

Here, we refer to recording and tracking incentives and investments received, the company's fixed and variable expenses, and its profits, preferably separated by periods.

In addition to facilitating the financial management and monitoring of business growth, having a record of all amounts that entered and left the company is an important differential when attracting new investors, who use this data as a basis when taking their decisions.

Separation of personal accounts from startup accounts

Especially at the beginning of operations, startups resemble companies of other formats. Therefore, it is not rare that founders end up mixing their personal accounts with the business.

However, this is a very mistaken practice that can compromise the growth of the business and the brand's image before possible investors.

Therefore, among our finance tips for startups is separating what belongs to the company and what belongs to the partners.

In addition to having separate bank accounts for each purpose, another way to make a clear separation of values is through the payment of pro-labore, an amount that corresponds to the remuneration of the founders, and to avoid incorrect or even abusive withdrawals from the company's accounts.

Consideration of different scenarios

One of the definitions of startups is that they are companies with innovative ideas, created in a scenario of uncertainty.

Precisely because of these characteristics, the financial management of this business model requires the entrepreneur to consider different scenarios.

The reality of the market where it intends to operate, the costs necessary to maintain itself until it finds investors, and the possible changes in the sector, are some more points that must be analyzed and considered to maintain the financial health of these companies.

Use of financial performance indicators

The financial performance indicators are tools used to measure the growth of a business and monitor and analyze your financial health. The financial indicators are based on the statements of a business's movements, such as its Balance Sheet, Income Statement for the Year, and Cash Flow Statement. Among the main indicators for this purpose that should be monitored are:

Operating Cash Flow (FCO);

Current liquidity;
Profitability;
Profitability;
Return on Investment (ROI);
Gross Margin;

Net Margin;
EBITDA margin;
Return on Equity (ROE).

About these tools, it is very important to highlight that financial metrics for startups are essential pieces to guide the company's decisions. Therefore, they must be considered and taken as part of the business management.

Process optimization

Optimizing a company's financial, tax, and accounting processes reduces the chances of errors, avoids rework, reduces the time spent on these tasks, and helps generate reliable data.

There are several tools for startups that can be used for these purposes, such as solutions to manage invoices.

An electronic invoice manager ensures that the fiscal document is issued and sent to the customer for each sale, facilitates the organization, and facilitates the financial management of the business.

The company can also make use of SaaS ERPs, which are cloud solutions that integrate different sectors of the same business. This facilitates communication, the transmission of data and information, monitoring of results, etc.