Last month, we talked about setting up your start-up finances. This month we look at how to remove the hassle that comes with running the finances of a startup business.
Starting a business is one of the most exciting experiences…..until you realize that now you have to keep track of the finances! Very few people start a business realizing just what a chore the finances will become. From years of working with many start-ups, we’ve created a 3 step process for minimizing the hassle that goes with the finances of any business.
The golden rule is to keep it simple. If your finances are complicated now, it’s only going to get worse as you grow and scale. We recommend using online accounting software and keeping the use of spreadsheets to an absolute minimum. Have clear daily/weekly/monthly task lists for your finances and have time set aside to complete these. DON’T do anything you don’t have to and DON’T let it get out of control.
The robots are taking over! It is now possible to automate so much of your accounts process, from entering receipts to chasing debts. Previously, it would have cost thousands of pounds to develop bespoke software to streamline your processes, now there is an abundance of low-cost, easy to implement technology openly available. Why would you manually send out invoices if you didn’t need to? Why would you manually enter receipts if it was automated? To get you started, check out Receipt Bank to automate the data entry of your finances? and Chaser to chase your debts in an automated (but personalized!) way.
Finally, if once you’ve simplified your process and automated what you can: outsource the rest. Spending too much time on the finances whilst getting your start-up off the ground is dangerous. It’s dangerous for two reasons:
1) The time spent on the finances is not actively growing your business, you need to focus on the stuff that will make the biggest difference – even as a numbers guy, I accept that messing about with finances is not a business growth activity!
2) The mindset you need for managing your finances is not the same as the mindset for growing your business – one is inward looking, the other is outward looking – and it’s difficult to flip from one to the other. Too much time in the ‘finances’ mindset is not preparing you to grow your business.
So what’s the answer? It’s simple, just get someone else to do it. If it costs you £100 per month to have a chunk of your financial admin taken off your desk, don’t think about the cost, think about what you can now do with the time at your disposal. I’m willing to bet you can make a bigger difference than £100 per month!
For an extreme example of outsourcing, check out Tim Ferriss’ book, The 4 Hour Work Week – this guy outsources EVERYTHING!
In summary, whilst it’s essential to have meaningful financial information at your fingertips to grow your business, it’s NOT essential that you spend all your time working to get that information. Automate what you can and outsource the rest.
Leave a comment below with any problems you are having with your start-up finances.