Startup organisations are a great way to start your career. After all, you are as new as the company, and there’s more room for you to grow your career quickly. The ambience in a startup, too, works in favour of new employees. Frequent games and fun activities cut the stiffness and tension from the tasks that lay ahead. Not to mention, startups pay their employees handsomely leaving minimal room for complaints.
Therefore, it does not require spelling out that the team put together to deal with every aspect of the company has a lot on their shoulders. From finance to research and development, startups must ensure that every one roped in is capable of handling an adverse situation and make necessary amends whenever the time calls for it.
Here in this article, we shall attempt to look into the role of the finance department in a startup.
Planning
Nothing wondrous can ever be achieved overnight and without a proper plan. Plans, no matter how boring they sound, are of paramount importance. There cannot even be an argument regarding its efficacy. When we talk about the finance team’s role in planning and strategizing, it usually involves setting short and long term goals.
Short term goals would be catering to the immediate financial needs of the company. The amount that must be set aside for a particular purchase, an immediate investment, cutting off expenses on things not required in the near future — all of these form a part of short term strategies while planning.
Long term goals would be the decision to seal a deal with an investor, or a business partner with a view of furthering the cause of the company. Therefore, the finance team is entrusted with the planning and strategizing of short term and long term goals, which would enable the start-up to chart great heights of success.
Data Analysis
One of the most important responsibilities of the finance team of a start-up is to work their way through nebulous figures, data and statistics and analyse them appropriately. Without proper analysis of data, a lot could be at stakes for the company. Crucial decisions regarding the company’s future and further investments depend on what the figures and data show. It is an onerous job and therefore, requires patience and the right skills.
The finance team cannot falter in their responsibility of data analysis, lest the future could look bleak, and in some cases uncertain. Based on the results from the data, course of actions are set. The management can decide which direction the company should be geared to, only when the finance team pull themselves together and dish out a comprehensive and accurate report.
Forecasting and Budgeting
Forecasting is not only an integral responsibility of the finance team but also of the management team. You could say that the finance and the management work hand in hand, and in sync while dealing with their respective jobs of forecasting. However, you would be mistaken if you believe that forecasting means to predict the future based on intuitions.
The finance team analyse data, works with numbers and only then attempts to predict what lies ahead of the company. It is a logical move and cannot be done without facts and figures. Therefore, you could very well understand the importance of forecasting by the finance team of a startup. It involves taking calculated risks and gauging opportunity costs. If the approximation deviates with a thick margin, chances are that the company shall incur irreparable losses. Forecasting leads to budgeting, which is yet again of vital importance.
Every company needs an extensively planned out budget on which it shall function. The finance team, more so of a start-up, needs to handle the responsibility with perfection since start-ups cannot afford to lose even a single penny. Keeping a weather eye on the market, and updating on the latest news on finance, are few of the many measures taken by the finance team of a startup company to stay ahead of the curve.
Doing Taxes
Every company, no matter on which scale it operates, need to pay taxes. The job of calculating taxes and seeing to it that the right amount is paid at the right time is also the responsibility of the company. The finance department needs to keep a record of the government forms, update them, complete them and send them so that the company does not run into legal troubles or hit a road bump on its way to progress. When a company is just starting anew, it needs to be aware of legal and financial protocols more than ever.
Conclusion
The job of the finance team in a startup company is quite a daunting one, and only the right people should be taken on board to carry out the duties. It is a competitive world out there, and it is imperative that start-ups have the right team to manage their finances, lest the company could suffer from precarious after-effects.