Challenges Faced by Startups
Every day, approximately, 137,000 businesses are launched in the world which leads to a more competitive business environment day by day. Regardless of the nature of the start-up, Fin-tech, Ed-tech, Manufacturing, E-Commerce, or Hospitality, every startup faces several challenges such as high competition, hiring talented technically sound high-performance teams, wise strategic partnerships, meeting the expectations, customer centric service and above all financial management strategies.
At the initial stage of a business life cycle, every dollar spent on technology, hiring, marketing and sales should be carefully considered, not in the short term but also in the long term when scalability and growth will be the key drivers.
One of the biggest challenges for a startup is to minimize the operations cost and making wise strategic decisions from the start. Similarly, it is essential to have an effective accounting spreadsheet system, so that you can maintain accurate records of your business transactions and prepare financial statements as per International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS). It helps you to ensure compliance-based accounting and taxation.
Strategies to Minimize Bookkeeping and Accounting Cost
Before deciding whether you need to prepare or use a simple accounting spreadsheets by yourself (even have slight Accountancy knowledge), or hire a full time Accountant (in-source) or Outsource Accountancy service we should look at the cost-benefit analysis for a startup business by considering all the options one by one.
Option 01: DO IT BY YOURSELF
IFRS and IAS are updating frequently, and it is hard for an entrepreneur to keep update himself/herself for the changes as its time consuming, energy drained activity and time is money, so it is more useful for an entrepreneur to focus on money generating activities and key strategic decisions instead doing the administrative tasks like filling the accounting spreadsheets by himself.
What an entrepreneur needed the most at the start; revenue generation and business relationships instead doing accounting and bookkeeping.
Secondly, Compliance based accounting and bookkeeping is essential for the growth of a business, right budget strategy, accurate financial planning and filing the right tax returns are incredibly important as a minor mistake in accounting and tax filing will resulted in high-cost penalties so it is advisable not to do accounting spreadsheet work and preparing the financial statements by yourself.
Option 02: HIRE AN EXPERIENCED ACCOUNTANT
It is quite challenging for a start-up and for an entrepreneur to hire an experienced full-time accountant for two reasons:
- High Cost: A full time employee will cost more and bring more liabilities, especially in the case of start-up it is always better to have least liabilities and minimize the operational cost.
At an initial stage especially start-up business probably has a few transactions, so it is not feasible to hire a full-time accountant and pay high salary alongside with other expenses such as office space, furniture, accounting software and computer system.
- Time Consuming Activity: To hire an accountant especially with the right skills, to prepare company’s financial statements as per updated IFRS and IAS, manage bank account related operations, bank reconciliation, analyze financial data and record keeping with proper tax filing, is not only a time-consuming activity but also, it is quite challenging task to find qualified person at affordable price.
Option 03: OUTSOURCE BOOKKEEPING AND ACCOUNTING SERVICES
The best cost-effective, high quality practical strategy to reduce bookkeeping and accounting costs for start-up business is to outsource accounting service from a well-qualified firm due to several the reasons as below:
- Cost-Saving: Start-up does not have many transactions and invoices/bills to record so it is quite expensive to hire a well experienced accountant from the early stage of the business also other expenses such as salary. Furniture, computer equipment and software costs can be avoidable if you outsource accounting services as you only pay for what you need.
- Eliminate Time and Cost of Hiring Processes
- Save your Time and Energy: You can focus more on strategic business growth and revenue generating tasks instead accounting and administrative tasks.
- Expert Accountant and Bookkeeper: Outsourcing may offer you a possibility to hire a well experienced, updated with recent accounting and tax laws changes, professional at an affordable price.
- Automation Technologies: Experienced Outsource accountants are highly qualified in accounting automation tools such as QuickBooks, Sage, Microsoft Dynamics, SAP, and relevant others. It is not only helping them to prepare the error-free record, but also cloud-based accounting shows you a real-time picture of your financial statements position and performance at any time on your desktop, laptop, or mobile screen through a software dashboard so it’s accessible, high quality and more reliable source for record keeping.
- Financial Advisor: Outsource accountant has years of experience working with other similar companies as well so sometimes they better advise you in budget planning and making sound financial decisions.
Just Keep in mind, when outsourcing, about the data security as you are sharing not only financial data, but also confidential agreements and banking data too so choose an outsource firm carefully and sign the privacy, data security and flexible level service agreement. Outsourcing the bookkeeping and accounting service is the most cost-effective option for the start-up business.
