How Your Company is Financially Disciplined ? Why Financial Discipline Is Important For Startup’s Growth !

How Your Company is Financially Disciplined ?  Why Financial Discipline Is Important For Startup’s Growth !
How Your Company is Financially Disciplined ?  Why Financial Discipline Is Important For Startup’s Growth !
 financial planning tools are essential for Keeping your startup on track

Financial Discipline Is Important

Startups can frequently be entirely and excessively focused on their product and/or service, thus assigning a comparatively inferior position to other considerations such as reporting, accounting, statutory compliance, back-office tasks, long-term plan of action, and finance tactics.

It may be easy to assume that the existence of dedicated teams would directly and easily translate into success for startups. But in their constant endeavors to rapidly make headway in the market and expand into a sizable company several startups often wind up becoming oblivious to well-grounded financial discipline is an all important fact of success.

Comprehensive Documentation

Keep a track of every rupee spent. From the money spent on travelling to/for work to practically everything else with an associated cost. Though the primary and more obvious objective is to ease the process of calculating and paying taxes, the other intention is to record business-related expenses.
As the business grows, you’ll, at some point, need to peruse detailed records. And if you fail to record them as you go, the information is bound to be lost, usually for good. Furthermore, precise records allow start-ups to chart and plan their future and growth.
Supports Business Decisions
Many companies tell me that they have a CPA(Certified Public Accountant) who does their taxes, or a bookkeeper that balances the bank statement.  While necessary, neither taxes nor bookkeeping will keep your business running in times of trouble. 

A mature finance function is one that helps management understand the financial results. Knowing what the results mean is so much more important than just knowing what the results are. A “mature accounting function” has answers to questions such as: How and how fast can we grow ? Is product pricing correct? Is the company profitable? Is working capital sufficient to survive the next challenge?

Chart Of Accounts

The chart of accounts is a list of all the accounts identified and used by a company for recording transactions in its financial statements. Defining these categories under which each transaction for the business is conducted helps instate the financial course for startups. It also gives the top brass a general summary of each transaction’s nature and purpose.
A Dedicated Accounting Function 
Every business owner recognizes that success is measured in dollars, yet not every business bothers to keep track of this singularly important resource.  This is like saying the company needs sales but has no sales people. This mistake is not size or age dependent.  I have seen long-standing and multi-million dollar companies that hobble along without an accounting department… until they run headlong into a financial crisis that bankrupts the company.

Set Up Internal Controls

Put an internal monitoring system into practice since it is not only of vital importance for attaining financial discipline but also helps make sure that mistakes and inaccuracies are identified and corrected at the earliest possible.
Admittedly, setting up a startup generally revolves around problem-solving, value creation, making mistakes, learning from said mistakes, and rectifying them. However, all of this costs money and in start-ups, money is generally limited.
Thus, it is imperative for them to practice prudence and financial discipline to ensure they are able to work towards achieving their goals even while facing financially extreme conditions.
With Experience and Skilled Advisors
The right person makes all the difference in every job, but so many CEO's (Chief executive officer ) have trouble judging the skills of a finance person. A tax CPA(Certified Public Accountant) is not generally skilled to help the company forecast, budget, set pricing, or even help management better understand the financial results.  It takes a specific skill set to put financial results into a business context and drive rational decisions.  Finding the right person with the right set of skills is key.

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