I hope this doesn’t catch you off guard, but money is definitely the most important factor in a startup’s ability to succeed. The cash is what keeps the servers running and the bills paid. In fact, a study conducted by CB Insights found that it was the second most common reason why Startups failed. At the same time, the burn rate within a startup is one of the few things that the team can control. With buzzy startup hacks and growth tricks that are all glamour and no substance, it’s no wonder that nearly 90% of startups fail. We’re seeing startups from coast to coast make the mistake of spending thousands on tools that offer a promise of growth while spending very little attention on the infrastructure that keeps everything in order. One of the rarely discussed parts of a startup’s software landscape, the finance stack consists of the various tools and software that help ensure that the lights stay on, everyone is paid on time, and spending is under control. In this blog post, we’re going to dive into the step-by-step process of building a finance stack for startups, including the assets that every startup needs to think about. It’s our hope that at the end of this piece, you will have a better appreciation for what finance tools can do to help you grow and ensure that your startup is destined for financial success. Let’s get to it.
Identify An Overarching Accounting SoftwareThis is where it all begins. Of course, we recommend talking to your accountant or bookkeeper for guidance, but an overarching accounting service is key. Your overarching accounting software is what you will rely on most frequently to get a snapshot of your startup’s financial picture. It’s the service that will connect with your official bank account to track your transactions along with ongoing bank reconciliation. In an ideal world, you would also rely on this accounting software to give you smart financial reports and budgets so you can better understand what’s happening financially within your company. When choosing an overarching accounting software, services with the most flexible integrations should be at the top of your list. Services like QuickBooks, NetSuite and Xero all offer a wide range of third-party integrations to make their service even more powerful. This kind of software should also allow you to manage, track and send invoices that are connected to online payments. Given that many startups don’t start out with actual invoices and instead take payments online, it’s also important for your overarching software to sync with your online transaction provider to offer an even more seamless integration. Which takes us to our next step…
Determine How You Will Accept PaymentIf there’s one thing I’ve learned about startups over the years, it’s the fact that no two are the same. Startups have many different target audiences, and with that comes a wide variety of needs when it comes to payment. Some startups sell their products online with a recurring credit card charge while others rely on wire transfers. Regardless of your situation, it’s important when you’re planning your finance stack that you determine how you will be accepting payment.
- Will you be accepting credit cards? PayPal? Bitcoin? Checks? Cash?
- Will all your transactions be done online?
- Are your prices fixed? Or will they vary depending on things like usage, seats or media impressions?
- Do you offer paid services?