Startups need to focus on the Unsexy – It can make or break them
Cash is King! People say. That’s the more true in the startup world than anywhere else. Having cash in your bank account ensures that you can survive and maybe become a Unicorn.
Most founders focus on the problem of getting more cash but if they also focus on how they are spending the money they can ensure that they are not overly dependent on external funds.
One key tool to monitor your cash is doing bank reconciliations on a regular basis. This is a very boring,time consuming and completely unsexy job which requires hours of sitting and comparing transactions in your back account with your books of accounts. However its an essential control which can be implemented without any technology and ensures that you as a founder know where is your money going and all the money that is due to you has actually hit your bank account.
“Show me the money” said Tom Cruise in Jerry Maguire and I feel a lot of startups just get happy with seeing the money by way or orders, transactions etc. However, until the money actually hits your bank its an illusion.
If founders only focus on the illusion then they are setting themselves up to die as a venture cannot survive without cash. Its like walking towards a mirage in a in a desert.
Bank reconciliations also ensure you know if you are over paying/double paying or if someone is cheating you. I have seen large companies loosing millions on due to over payments to vendors. They can take that hit but a startup already starving for cash cannot.
So make sure you ask your accounting team to give you a status of bank reconciliations every week and if they are not doing it get to start. It maybe the one thing that helps you keep above water till your next round of funding.