‘Business Intelligence’is the process of analysing data and reporting it in a way that can help a business make informed decisions. There are many solutions and opportunities whichever stage of development your business is at. Here we look at the benefits for start-ups.
As a startup, your business likely survives on contributed equity and debt and your resources are stretched thin. Profitability (or a decent director salary) is a lofty goal. You most likely have a great business concept, but now comes the first challenge: how can you steer your business towards profitability, and make sure that you attract investors and secure loans?
Your financial management solution needs to be affordable (or even better, free!), but still give you all the information that you need to make intelligent business decisions. So, what is really essential in a business intelligence solution to lay great financial foundations for your business? Here are our three top tips.
1. Adopt an accounting software – the first step to growth
When they hear the words ‘accounting software’, most startups’ reaction is that they’ll deal with it once they really have to and not a second earlier. Yet, today’s accounting solutions are nothing like the dull and time-consuming record-keeping of the past. Think instead of your accounting platform as your business operation platform – straight-forward, automated, integrated with your other business platforms, and the first place you look for information on your business.
While you may understand everything about your business now (it’s easy when you’re so small!), as your business grows, it will be hard to do that without the right systems in place. So don’t wait until your financial data is unmanageable – adopt an accounting solution early on!
Choosing an accounting system and setting it up with growth in mind will allow you to track your financial performance well into the future. As long as your system is set up correctly and you or your accountant regularly reconcile your accounts, it will automatically provide you with a financial ‘health monitor’ – for example, you’ll be forewarned of cash flow pressures and able to put yourself on an ‘expenditure diet’ if necessary. Integrating a budget into the accounts will enable you to self-diagnose any issues and determine your business’s life expectancy without revenue or fresh cash injection.
2. Marketing and finance is a valuable connection – use it!
You may already be using Xero or QuickBooks to manage your expenses and track your cash flow, but did you know your software can help you track and measure your sales, marketing and financial objectives? The reports are all there for you to use and analyse! Your accountant can also set up customised ones that focus on certain areas of your business too.
Some of the more advanced reporting options can integrate your social media, website and marketing automation analytics to help scope out your target market and identify niches of expressed interest. For startups though, Excel will likely be your best companion initially. You can export information from various online sources and combine it to create a report that suits your needs.
Startups that make it to the next step of development are generally those that surround themselves with switched-on and savvy advisers (think of them as your ‘cohort’). They should be across all aspects of your business. Don’t keep your accountant away from your marketing strategy! We might not steer you to the latest design trends, but we will add some financial perspective to your decisions (ie maybe throwing all your seed capital at developing a brand mascot is not the wisest move?)
3. Make sure that investors understand your business
You don’t often get second chances when presenting to investors or banks, and your analysis and reporting abilities need to shine. Remember that you are not just trying to convince them that your idea is a winner, but that you and your management team are the ones to bring to the championship.
Reports for investors typically cover these important topics:
- Proof of concept
- Revenue targets
- Customer targets
- Day-to-day cashflow
- Industry information
As your financial advisor, we can help with reports for potential investors in two important ways.
If you need a clean report for handouts, run it past us first to avoid unfortunate mistakes that could distract from the rest of your presentation. We might even be able to give you some tips about the layout if you don’t have access to a design-savvy person.
Secondly, you should be able to answer questions on all areas in your report, and we often help our startup clients to prepare for this. We will not know your business as much as you do, but we can prompt you to thoroughly think about your answers.
Do you need Accru’s support?
Accru Felsers is a strong supporter of startups and has successfully helped many businesses take their first steps and progress to the next stage of their development and onwards to great successes. Contact Will Merdy if you would like to discuss how we can help your startup implement an ‘intelligent financials’ to propel you forward.
Business Intelligence is about collecting, integrating, analysing and reporting on a business’s information. From Excel to Xero, and all the way to Power BI, there are many solutions and opportunities for business. This is the first of a series of articles explaining how your business can thrive by becoming attuned to Business Intelligence. Watch out for the next one and read more about how we use business intelligence to help our clients here.