21st June, 2017
Startups are shaping up as one of the biggest emerging markets for accountants. How do you make sure you’re set up to meet their needs?
According to the latest Startup Muster report, more than 89 percent of Australian startups outsourced work in 2016.
Of the work outsourced, just under 60 percent of the work was accountancy related, making it the single biggest category of work outsourced.
The reasons for this are pretty clear.
While startups are getting to work disrupting systems and markets with game-changing ideas, the more practical aspects of running a business can be hard to manage.
But having a great idea isn’t worth squat if your business isn’t running smoothly.
Here’s what they told us.
The founders were pretty consistent on one point: as startups they need accountants to operate lean, not cheap.
“As a startup you’re running so lean that you really have to make sure you’re only spending money on the essentials,” said Harris.
“If you don’t see it as essential you won’t spend money on it.”
It’s a perspective Coldham backed.
“We’re really counting our pennies and have to stretch our funding as far as possible. We need accountants who understand this and help costs low at the start,” she said.
But that doesn’t mean that startups won’t become more valuable clients down the road. The founders agree that accountants who work with them in the beginning of their journey should be ready to scale – rapidly.
Startups in the tech space tend to have some unique jargon.
Things like ‘minimum viable product’, ‘cash runway’, ‘churn’ and ‘lifetime value’ are littered throughout conversations and core business concepts.
Being able to speak the language will help.
“I want them to have an understanding of startup life – what life is actually like for us, what all the highs and the lows are like,” said Coldham.
Wright said that getting somebody consistent to work with their business would help with this.
“Don’t send in junior staff who need to be retaught at every interaction,” she said.
Meanwhile, getting involved in the startup scene through attending events and building relationships is a great start.
For example, could you give a talk on the R&D tax incentives available to startups to one of the many startup meetups running in your city?
While some startup founders will be well versed in the realities of running a business, many start to pursue an idea rather than a business – and start the business to serve the idea.
“If it [an accountant’s service] included some training for non-financial founders so we can learn how to manage the books on a day to day basis, it would reduce the work for the accountant while empowering the startup founder,” said Harris.
This also comes down to explaining core concepts that you might assume startups already know.
“Help with financial reporting, tax returns and bookkeeping would be great,” said Jenkins. “I want things fully explained so that I can be confident in my financial decisions.”
Wright also said that an accountant could be valuable in a business-planning capacity.
“Timely, cost effective advice [is great] – especially around pricing plans and cash flow budgeting and forecasting,” she said.