The startup phase is a wonderful time for companies. The attitude and fire within are contagious throughout the limited set of workers. Being free of strict restrictions of a broader organization, employees work together in an informal structure that stimulates creativity and modern skills advancement.
But with time as things thrive, the informality becomes an obstacle. Instead of a neat squad donning multiple hats to deal with various tasks, you are left with a bigger crew to cater to specialized duties. A lot is going on for everyone to be involved in key decisions. This smells of disorganization and projects start ending up dead in the water. After the startup, this particular phase is a crucial indicator of the company's success and is often termed as the growth phase. Efficient planning to outsource accounting services is often the deal-breaker for such miseries.
The growth phase of any startup undergoes various struggles and phases before attaining maturity.
- Competition: This is as evident as it could be. No matter how good your idea is, there will be cutthroat competition from the adversaries to attract more clients. Immediately after the company's launch, exhaustive efforts go into increasing the customer base and improving service. Spending as little from your seed money is key unless intended to get new clients or serve the ones you have.
- Brisk expansion: This phase demands a moderately stable customer base. Such that you are ensured of generating consistent income and attracting new customers. Finding such vitality enables stable cash flow.
Things ought to grow, and businesses must venture into new markets and expand. This stage presents various challenges in maintaining cash flow and working capital. And many businesses have gone down the road trying to expand too quickly. You need a proper management report by a Finance and Accounting outsourcing service for measuring the Return on Investment(ROI) on every step you have taken, to make sure of your increased profits. A decision in haste might be working well short term but often have long term staggering consequences.
- Product development: This stage's primary focus revolves around fast results, stable revenues, fast entry of products into the market, and its low burn rate. These can be achieved with a technically talented team with the right appetite for nurturing quality skills and improving performance. Apart from the technical aspects, it would be best if you had financing and accounting experts to guide you with the fast market and sales penetration. And also implement ideas of proven processes and development models.
Improving Cash Flow
A growing business requires stable cash flow, something that has been touched on before in this article. As easy as it may sound, the overall process requires an experienced hand and scrutiny to sustain the cash flow over a prolonged period of time. A way of achieving this is to Outsource Accounting services. It will keep you away from scratching your head over all accounts and let you focus on the firm's technical growth. Here are a few ways of improving the cash flow:
- Financing earnings back into the company: This is the smartest and reasonable way of using profits for the company's growth. This does not necessarily require you to cover cash flow shortages. Revenues could be used to boost service delivery, spend on smart marketing strategies, or expand the product and service offerings.
- Outside funding: This should be the last resort and is rather uncommon during the growth phase. But firms generally use this form when trying to venture into a big project. There are two ways of seeking funding through this, either by selling equity(more common) or debt. While selling equity, be sure to get what you want without any dilution of ownership stake. It is well-advised to gain insights from Bookkeeping Outsourcing services and even let them handle the situation to avoid any mishaps that you would later regret.
- Key Performance Indicators: There goes saying, "numbers do not lie." And this applies accurately to finances. Past financial statements indicate the Key Performance Indicators(KPI) from the not so ones. It is quite evident that sectors with high KPIs are the ones you would want to keep rolling and improve low KPI sectors to increase revenue. With accurate bookkeeping of financial data, vigorous supervision, reporting, and accounting, your finances will reveal in front of you, and you can make necessary adjustments. Apart from this, the expert reports will indicate your past endeavors' precision, be it sales representatives, marketing campaigns, or clients. This will act as the proper learning curve for future ventures in mind.
Optimizing Financial Management
As the company grows, you will need to up the tempo. Strong accounting and bookkeeping systems, along with a CFO or advisor, help you steer, predict, and get ready for financial challenges business growth may face. And with the digital age such as this, you also have the freedom to record finances through expert Online Accounting and Bookkeeping Services.
As a startup, you are generally unaware of certain models to implement during development. Under expert guidance, you will be filled with ideas to ensure incubation, gestation, advancement, and adaptation support to boost revenue and maximize return on investment in a short span of time. Without proper financial expert backing, you run the risk of your shares coming down or a situation of sudden economic drop without prior knowledge of it. And God forbid if that's the case you are in no way prepared to counter such moments.
For a running business, you have to optimize whatever options are there in front of you. Speaking of financial records, it portrays a lot about ongoing business, and what needs to be strategized to increase profits without running through any risks such as selling equity or taking debts.
A startup comes into existence thanks to its breathtaking idea that has a high practical impact. But if you want to sustain yourself in the long run, you need a proper Accounting and Bookkeeping services team to provide you the daily input of company records from a time-to-time basis. Enriching you with the ongoing market and whereabouts of the places to strike or back down as necessary.