Startups are here to stay.
According to The Kauffman Foundation Index, the largest tracker of entrepreneurship in the country, startup activity is on the upswing again, reversing a downward trend that started in 2010. If you’re an accountant who’s interested in joining the ranks of one of these ventures, it can be difficult to know where you fit in.
Some experts say, however, that the issue isn’t where you fit in; it’s when you fit in. There’s a lot varied thinking about the timeframe during which a startup should seek out an accountant.
A 2014 Forbes article, “Accounting for Startups” likens a startup’s need for accounting services to a newborn’s need for a parent to “track the number of breaths per minute and compare it to to the average for all newborns.”
In other words: Startups don’t need accountants because they’re superfluous number crunchers (i.e. you don’t need someone counting your money until you begin making it).
But consider the other side of that argument.
You know the saying about staying in your lane? Well, many entrepreneurs are playing several roles (executive leadership, administrative support, customer service guru, marketing pro, etc). The last place any new-business owner should want to skimp is on their bottom line. Keeping track of sales and expenses in the early stages is the key to success. A good accountant keeps you on top of your money.
People who think accountants aren’t necessary for startups might think differently after reading “The Top 5 Reasons Startups Fail” , which says that one of the biggest problems that startups run into is not having enough money to run the day-to-day operations. Poor financial planning is a recipe for business failure. Great bookkeeping is the heart of your bottom line; without it, you can’t know the financial health of your company.
While it may be a good idea for small businesses to hold off, for a time, from bringing on an accountant, it’s still not a service that any competent entrepreneur will put on the back burner indefinitely. So, if you’re an accountant who’s looking to utilize your experience in the startup world, you might consider barking up a more mature tree. A fresh-out-the-gate company would certainly benefit from the insight, service, and skills that you bring to the table. But, quite frankly, they might not be ready to afford you—yet.
So, rather than seeking out those fresh faces in the startup community, consider forming ties with more seasoned entrepreneurs who have gained traction in a successful venture and are poised for growth. As a good accountant, you can help new businesses know exactly what their finances are before they gear up for the next wave.
Since some startups might be dubious about an accountant’s role, thinking that accounting a seasonal service they only need to seek out at tax time, it’s up to you to know your worth year-round.
What is an accountant’s worth to a startup, you ask?
To answer that question, check out this 2014 Huffington Post article, 5 Reasons Why Your Start-Up Needs an Accountant. The writer outlines several great points. One of the primary benefits that an accountant brings to a startup is providing a much-needed voice of financial reason. Many new-business owners are incredibly driven and incredibly passionate—this is the firing-on-all-cylinders energy that keeps them engaged in the narrative of what they’re doing and why they’re doing it. But as an accountant, you help balance all that. You provide the data, the facts figures, that prove what works and what doesn’t.
The more time you spend working with a startup, the more you will become its voice of financial proof to potential investors. You’ll speak authoritatively about the company’s solvency and you’ll be the person who can spell out the business’s financial projections based on your history with the company.
So, a note to startups (and the accountants who want to work with them): Remember that vision is nothing without viability.