< Back to all

Accounting and Finance Playbook for Startups — The Top 12+ Things You Need to Know


We are honored when we get approached by technology accelerators to share our point of view on the key elements for start-ups in setting up their accounting/finance/HR back-end.  Why?  Well, because I was there, as a TechStars company and as a mentor with them for many years.  I know that in the frenzied moments of trying to build a product and raise money and be the next “big thing”, that foundational details get sacrificed.  It may not feel like that big of a deal but a lack of the back office backbone will make it very hard, very soon (to hire people, raise money, build partnerships).  So here are my top 12+ of what you need to know to orient your finance/accounting playbook for your start-up.

1. Cash is King. I know, obvious right?  Here is a blog post on the importance of cash but the point is that managing your cash is like managing your oxygen.  You don’t want to run out of it.  If you have to cut costs, cut them early.  Frankly, ramp expenses slower than your investors suggest.

2. Metric Mastery. It’s a smart world out there and getting smarter.  You need to have a firm point of view on the metrics that matter in your business, how they are calculated and why they matter.  Here is a short post on the key metrics for a recurring revenue business.

3. Your Golden Metric. If there was only ONE (yes, one) metric that you measured at this stage of your business, what would it be?  And I’m talking here about an Input Metric (something you can control) For us, that metric is Number of Outside Meetings/Calls.  Our Number of Meetings drive so many implications for our business.  What is yours?

4. Truth Lives Outside the Building. Your finance and accounting sophistication is purely a function of your environment and your environment is dictated outside of the building.  Your grasp of the Business Model and Value Proposition Canvases demands you do customer development.  Finance/accounting is just a language that interprets what and how you are doing in the market.

5. Construct Your Financial Model for What-If Scenarios. We may be Excel ninjas and can build a model but we need to build it in a way that leaves flexibility for the drivers of revenue and cost.  As you experiment and learn and validate, make sure to have a financial model that allows for what-if scenarios.

6. Exercise in Reasoning, Not Prediction. You need to have a thoughtful forecast and not because the numbers are going to be right.  In fact, they are wrong.  But the purpose (especially for investors) is that you show a logic and reasoning for how your model is constructed (and informed by your customer development).

7. Know Your Swim Lane. I am a big fan of being clear on your area of expertise and staying in it.  I wrote about it recently.  When you compromise (“Oh, I can do everything”) you will sacrifice momentum.  If you’re not a finance/accounting pro, don’t try to become one but make sure this area is covered so you can sleep well at night knowing someone owns it.

8. Do Not Do Payroll Yourself. Payroll is confusing, all of the withholdings, rules and regulations.  Just don’t do it yourself.  Use a service.  It’s inexpensive and makes it easy to bring on new employees without energy draining from the process.

9. Implement Carta. Yes, this is a product plug but I have used it and love it.  It is the easiest way to manage your cap table with investors and all of the complexity around governance like board minutes, stock option plans and 409A reports.

10. Outsource Everything. Well, pretty much everything.  At the early stage, the only people in the organization should be those building product and selling product.  Everything else should be outsourced.  Period!

11. Bacon is Not the Answer. It may be for some things but not financial information 😉  What I mean here is that you should demand good questions and answers from your financial statements and analysis.  You do not want to fly blind with respect to expenses as they can tend to creep up faster than you might be able to react and then we’re having a different discussion.

12. Nail it Before you Scale it. The classic tech start-up problem is scaling it before you nail it (nailing it is defined by (i) a few customers (ii) willing to pay you (iii) for a measurable problem to solve and (iv) willing to be a reference.  Maintain your discipline.

13. Celebrate Often. The Road is Long.  Too many of us hit a milestone and then dismiss it because it’s on to the next mountain.  Stop for a minute and acknowledge the win.  It is that the energy that will keep you going.

The startup accounting / finance playbook is not just about making sure you install Quickbooks Online and other tactics.  The accounting/finance playbook is a set of considerations that will both influence your business strategy and also have you showing up to investors in a very smart and more confident way.  We help clients put this playbook in place at Stride and act as a guide with our many years of experience navigating it ourselves as tech entrepreneurs.  We can help you, but first, study the playbook.

Ready to Achieve Your Highest and Best Use?

Contact us today for a free consultation.