Running and growing a startup is a challenging endeavor. According to stats, of all small businesses started in 2022, approximately 56% made it to the fifth year. In other words, almost half of all SMBs go under within this period, and poor cash flow management together with other money-related issues are often to blame for their untimely demise.
Every entrepreneur is expected to have at least basic financial literacy, but by no means is that enough for keeping books and managing one’s business finances and budget.
A reliable accountant is a must if you want your startup to take off properly and thrive, but managing your business books is only one facet of their job. They also manage your taxes as they know a lot about tax calculator.
Having a seasoned professional by your side will help you find ways to reduce your expenses and boost your revenue.
Here is why an accountant should be a core member of your team and what they can assist you with.
1. Launch Your Startup
Do you have a good business idea that you want to bring to life?
Well, unfortunately, that is not all it takes to succeed. Knowing how to make money and being able to convince banks and investors of that are must-have skills.
And given that securing adequate funding is one of the most important factors for the success of your business, it’s obvious that you need a viable fundraising plan.
That is where an accountant comes in to lend you a hand by making sure that your startup costs are properly identified. Besides that, potential creditors also want to see some credible revenue forecasts, and you can’t create this document without the help of a seasoned accountant.
They will also take care of collecting all the relevant information and data required for a loan. Since they understand all the ins and outs of the loan application process, an accountant will ensure that you’ve crafted a stellar application that a bank won’t reject.
Finally, due to our new, COVID-19-related life circumstances, many businesses have decided to expand their traditional brick-and-mortar model by switching to the online environment. That’s why having an accountant by your side at the beginning of your startup can be critical for making the right decision regarding your business model.
2. Set Your Goals
When you are starting a new business, it can be hard to distinguish crucial things from the less important ones.
Your accountant can step in and push you in the right direction so that you can focus on the aspects of your business that really matter. This can be achieved by setting your personal, business, and financial goals, and later on by monitoring your progress.
A number of key performance indicators (KPIs) will show you how well your startup is performing, as well as what business activities you should zero in on. Similarly, an accountant is familiar with tax laws and regulations, meaning that they can instruct you on how to reduce your expenses by leveraging the right tax-saving strategy.
3. Make A Viable Business Plan
By writing a formal business plan, you increase your startup’s odds of succeeding by 16%.
As this is one of the most important business documents, it’s best to include a financial expert while creating it. Apart from identifying, describing, and analyzing a business opportunity, as well as organizing your activities into a number of steps you have to take in order to achieve your goals, a business plan is instrumental in helping you obtain funding.
This particularly refers to its financial section that has to be polished, neat, and detailed in order to show potential investors that you’re serious and that your idea doesn’t rely solely on taking chances without research.
And to ensure that your business plan won’t fall apart under all the scrutiny, you need an experienced accountant.
4. Take Calculated Risks
While you don’t want to make risky decisions, it’s still impossible to grow your startup unless you’re ready to take leaps of faith. But, the fact that risk is a part of the equation doesn’t mean that you’ll simply do things based on your gut feeling.
An accountant will eliminate the guesswork from this process by calculating different risks and predicting the outcomes of your business decisions.
In this line of work, it’s critical to have someone who’ll help you navigate the white waters growing a startup and make sure that you haven’t drifted away from your course and your established goals. That way, an accountant will prevent such inconsistencies from hindering the growth of your business.
5. Support You Through A Rough Patch
Being an entrepreneur is no picnic.
There are many roadblocks, problems, and tight spots that you’ll have to deal with. And it can get pretty lonely, especially when you work long hours and don’t get a chance to see your friends and family.
If you pick the right accountant, this person can become your ally and confidant, and somebody you can talk to about your business. They know a lot about business and will help you with their expert advice.
But you shouldn’t neglect the moral support they can provide, as having someone who believes in you and your idea is essential during the times when you start questioning your decision to leave your comfortable 9-to-5 job.
6. Manage Unpaid Invoices
Every business has its fair share of unpaid invoices.
But these can seriously hurt your cash flow and jeopardize your startup. However, with all the work throughout the day, you don’t have the luxury of chasing after your debtors and asking them to settle their bills.
And you don’t have to, because an account can set up an invoicing system that will remind your customers that it’s time to pay for the services or goods you provided. If they fail to make payment after this, some accountants are ready to pick up the phone and call debtors that fail to respond to emails.
Finally, if all these efforts don’t pay off, your accountant can get in touch with companies that purchase accounts receivables and let them take over your unpaid invoices. This way, your cash flow will be improved, and you won’t have to worry about dealing with irresponsible debtors.
Poor financial management and planning can lead to business failure, and these six examples perfectly illustrate how hiring an accountant can help you avoid this worst-case scenario.
Michael has been working in marketing for almost a decade and has worked with a huge range of clients, which has made him knowledgeable on many different subjects. He has recently rediscovered a passion for writing and hopes to make it a daily habit. You can read more of Michael's work at Qeedle.
