How Startups Can Survive By Leveraging Financial Accounting

A start-up is any company that is still at its early stage of development. A start-up is a young company that is still at the development stage of its business life cycle.

Undoubtedly, start-ups have continued to shape different economies by creating employments opportunities. Start-ups have the potentials to develop any economy since it can attract foreign direct investments and increase GDP.

Despite the huge economic opportunities available to start-ups, a lot of them could not survive and have had to cease operations. Of course, economic conditions can also determine the survival of any start-up.

In this article, our focus will be on how start-up businesses can leverage financial accounting to grow and expand their businesses.

It is no longer a news that many start-ups careless about proper financial accounting practices and financial management. What we hear are breaking news of how huge capital is being raised by start-ups. It is beyond just raising capital. How will the capital raised be properly managed and accounted for? This is an important question investors and relevant stakeholders should be asking and following up on.

The drivers of governance of start-up businesses should have a mindset shift and appreciate the importance of having a sound accounting system in place. This starts by ensuring that the business hires a competent and experienced accountant right from day one of its business operations. Some start-ups focus on operations and neglect the need for an effective and efficient accounting system. Forgetting that operational activities have accounting implications.

Leveraging financial accounting will help start-ups have visibilities into their operational and financial performance in terms of profitability, revenue performance, expense, liquidity and cash flow planning, inventory and receivables management, etc.

Leveraging financial accounting will ensure that start-ups are able to file their tax returns, enjoy tax benefits, raise additional fundings and even pitch deck to potential investors. No potential investor will take any start-up business without proper financial accounting records serious. This would negatively impact the ability of the start-up to sell itself to investors and expand the business.

Starts-ups should appreciate the several benefits the business can get by leveraging financial accounting. Financial accounting systems should be implemented right from the start of the business. It is important to note that no start-up business can survive without proper accounting system in operation.