Michigan’s start-up scene is on fire, and that means there are lots of entrepreneurs out there looking to get their nascent businesses off to the right start. Preparing a start-up for the days when lenders, venture capitalists or other investors come knocking begins before revenue even comes through the door. Make sure you’re paying at least as much attention to the financial aspects of running a start-up as you do the beta testing. Here’s how:
- Accounting software is easy to use to track your income/expenses and a “must have” for even the smallest, earliest business venture. Quickbooks offers an entry-level, easy-to-use product that only costs $150 – $200. Keep your books on the cloud for more flexibility and ramp up to their larger software suites as your business grows.
- Use a mobile software like Square for your point-of-sale–it’s easy to use and holds powerful financial information to better understand your business.
- Take entrepreneur courses, either one specifically in accounting (Grand Circus  will have some good ones, although they are also just starting up!) or go through an incubator program (Michipreneur  has a great comprehensive list of resources!)
- Sit down with a trusted professional to get a good understanding of what costs drive your company. You may be able to find a mentor who understands your specific industry and its related financial issues through SCORE or ask to pick the brains of a CPA you know.
- Keep an eye on the bottom line, even in the earliest of days. Typically, a tech start-up will incur two costs: employee costs and hardware costs. Employee costs are controlled by making the right hire and being creative with their compensation packages. Hardware costs are controlled by only purchasing what you need, not what you want (i.e. you don’t need a gaming system to write code). If you can’t discipline yourself on either of these cost centers, make your next hire someone who can.
Starting a new company is exciting and can move very fast, if you’re lucky. Make sure you accounting system and financial controls are ready for the business you are creating.
ShindelRock loves start ups! Call us (ask for Steve W or tweet @stevewisinski) if you need more detailed start-up accounting advice!