Startup organizations are a great way to start your career. In the end, you are new to the company, and you have more opportunities for a quick career development. The atmosphere in the startup also works in favor of new employees. Frequent games and fun activities relieve stiffness and tension from the tasks to be solved. Not to mention the fact that startups generously pay their employees, leaving a minimum of room for complaints.
Thus, this does not require clarification that the team, united to solve every aspect of the company, has a lot on its shoulders. Starting with finance and ending with research and development, startups must ensure that each of them is able to cope with an unfavorable situation, and make the necessary adjustments when time takes it.
Here, in this article, we will try to understand the role of the finance department in a startup by the example of especially common problems of almost every startup.
Planning
Nothing surprising can be achieved in one night and without a proper plan. Plans, however boring they may be, are of utmost importance. There can not even be an argument regarding its effectiveness. When we talk about the role of a financial team in planning and developing a strategy, it is usually about setting short-term and long-term goals.
Short-term goals will satisfy the immediate financial needs of the company. The amount that should be allocated for a specific purchase, immediate investment, cost reduction for things that are not required in the near future - all this is part of short-term planning strategies.
Long-term goals will be the decision to conclude a deal with an investor or business partner in order to promote the business of the company. Therefore, the financial team is tasked with planning and developing a strategy for short-term and long-term goals that will allow the launch to outline great successes.
What do we not take into account?
Most often, we are faced with the problem that novice startups simply ignore some aspects of their goals. They can fully describe all their short-term tasks in the near future, but at the same time do not have any long-term solutions. This ruins them and their own business. The same can be said when the exact opposite happens. However, if you plan everything on time, you can get a successful business and a good income.
Data analysis
One of the most important responsibilities of a startup’s financial team is to wade through foggy numbers, data, and statistics and analyze them accordingly. Without proper data analysis, much can be at stake for a company. Specific decisions regarding the future of the company and further investments depend on what the numbers and data show. This is hard work and therefore requires patience and the right skills.
A financial team cannot be held responsible for analyzing data so that the future does not look bleak, and in some cases uncertain. Based on the results from the data, the course of action is established. Management can decide in which direction the company should focus, only when the financial team gets together and provides a comprehensive and accurate analysis. However, if the bosses can trace this, then by the end the numbers will really be specific, which will itself affect the subsequent productivity of the company.
The mistake is that, as a rule, either the company’s employees on the financial side prepare a good report, and the bosses don’t know what to do with these numbers, or, on the contrary, the management requires something that the workers have no idea about. This conflict can only be resolved through the assistance of both parties.
Forecasting and Budgeting
Forecasting is not only an integral responsibility of the financial team, but also management. You could say that finance and management work hand in hand and synchronously in dealing with the corresponding forecasting tasks. However, you will be mistaken if you think that this means predicting the future based on intuition.
The financial team analyzes the data, works with numbers and only then tries to predict what the company is waiting for. This is a logical step, and it cannot be done without facts and figures. Thus, you could very well understand the importance of forecasting by a startup financial team. This involves the adoption of estimated risks and an assessment of opportunity costs. If the approximation is rejected with a large margin, it is likely that the company will suffer irreparable losses. Forecasting leads to budgeting, which again is vital.
Every company needs a carefully planned budget, with which it must operate. A financial team, especially a beginner, must cope perfectly with responsibilities, as startups cannot afford to lose a dime. Keeping an eye on the market and keeping up with the latest financial news are just a few of the many measures taken by the financial team of the start-up company to stay one step ahead.
Taxes
Each company, regardless of the scale on which it operates, must pay taxes. The company is responsible for calculating taxes and controlling the payment of the right amount at the right time. The finance department needs to keep records of government forms, update them, fill out and submit, so that the company does not have legal problems and does not appear more than what is needed at the moment, obstacles to progress. When a company is just starting over, it needs to know more about legal and financial protocols than ever. Indeed, if employees and management do not have a clue about this, then what kind of progression can we talk about? You will simply be stopped at every step by the appropriate authorities and services!
Conclusion
The work of a financial team in a startup company is quite complicated, and only suitable people should be brought on board to carry out these duties. This is a competitive world, and it is imperative that startups have the right team to manage their finances, so that the company does not suffer from unstable consequences.