Our goal at Fuelfinance is to make financial management approachable rather than intimidating. After 250 projects, we have firmly established that a systematic approach to finance doesn’t have to be daunting.
In this article, we’ll break down how to take control of your startup’s finances: from Accounting to Managing your Revenue.
STEP 1. Stop using your personal account for business transactions
First things first, it is essential that a startup has a business bank account different from that of a founder. This brings up the extremely awkward question of salary. How do you calculate a CEO’s salary?
If the total fund is about $2 million, the average salary is around $100,000 annually. Find all details about CEO salary in the table below.
Jack Dorsey is famous for receiving a salary of $3,750 a year, when his company was a startup. Whereas Jeff Bezos started with below $65,000 annually. It is important to establish this number, especially if you can’t be an active CEO yourself. Then the reins should be handed over to someone else, and these expenses should be taken into account to understand the profitability and financial efficiency of the company.
STEP 2. Be disciplined with your bookkeeping
Keeping track of the books is another essential aspect when starting up. Without them, your financial reports won’t let you understand the profitability of your business, let alone procure investors.
There are tons of affordable bookkeeping software services out there. It does take some time to set them up initially, as you need to fill out revenue and expense streams. But you can ask an accountant to help with that one, and this will allow for smooth sailing for the fiscal time of year. In fact, we do recommend hiring an accountant or a bookkeeper to maintain control over the organized chaos. There’s a constant flow of invoices and receipts in any startup: payroll, taxes, rent, bills, etc. Keeping up to date with your records is vital to the health and viability of a startup, so having a professional familiar with the financial principles of your country save time, hustle, and money. And when your records are all on point – it’s time to collect the data!
STEP 3. Managing Your Data
Your data is your fuel to boost the revenue. With appropriate data collection you can draw all of these:
– lead generation funnels;
– conversion rate funnels;
– profit and loss (P&L) reports;
– unit economics of each segment;
– a client’s net promoter score and latest trends;
– extremely elaborative diagnostics via dashboard like the overall churn rate, investment to value, salaries, and hours worked across the board.
Based on this data, you can make super accurate financial models, and it should give you one financial report, to be reviewed on a weekly basis, outlining revenue, leads, pending contracts, etc.
And once you’ve settled the formalities and have all your data in front of you – it’s time to make some financial decisions and manage your finance.