How healthy are your business' finances?

At GrowthBuilders we offer all the companies on our programmes a free financial healthcheck. With four scale-up programmes kicking off in the last couple of weeks I’ve been very busy!


A financial healthcheck is a quick review of a scale-ups finances where I review the company structure, eligibility for various tax incentives / grants, the team structure and incentive schemes in place, the financial processes and controls and the performance information used by the Founders to check where they are and how much cash they have to fund future growth. As I’ve done over 50 financial healthchecks I thought I’d share some of the key learnings:


Cashflow management remains the top priority

As I said in this blog cash is king. CB Insights analysis showed that the number 1 reason for startups to fail was running out of cash. Many of the businesses I review who are in the early growth phase experience cash burn as the main focus for Founders. They have developed a product, assessed product market fit and are investing in sales teams to drive revenue growth. This is a crucial phase in business growth as Founders need to balance the cash burn against tangible achievements in the sales pipeline.


Incentivising staff is now more important than ever


The job market is booming and startups have to be even more competitive in the fight to recruit and keep top talent. Many founders are reluctant to give away equity or shares in their business but share options represent a very real differentiator to potential employees.


In this blog I explain the different types of share options and advantages and disadvantages of both for founders and employees. As ever, the key is to get the right plan in place early to attract and keep the key people as the company ramps up.


Make sure you are applying for R&D tax credits


As I said in this blog R&D tax credits can provide a real source of fast cash funding. Many of the businesses I’ve spoken to hadn’t realised that they were even eligible to apply. In the linked piece, I explain who is eligible, the types of relief available and the process to securing the cash.


Investors want good forecasting and management information

To secure funding and satisfy your investors you need to have decent, robust and credible management information. This can be a daunting prospect if you don’t have a finance background.


Many of the companies that I work with are transitioning from managing the finances themselves to taking on finance support to ensure they can meet this new reporting requirement.


In this blog I explain some of the basics of how to get your reporting right.


International sales expansion


We are living and working in a world where you can buy goods and services from companies based across the world. The majority of the companies we work with are already trading internationally and are looking to grow sales in new markets.


This presents a number of financial challenges in invoicing correctly and ensuring the correct taxes are paid. These challenges can be difficult to overcome for early stage companies and so we work with partners like Avalara to ensure the companies we work with can access the advice they need.


Knowing what metrics to track


Many of the Founders I speak to are baffled by the number and variety of performance metrics they think they should be tracking. We go through the key drivers that matter to their business and tease out the top few metrics they should know so they can drive improvements in these. As I set out in this blog there are usually a few top metrics that will drive the most benefit to scaling businesses.


If you’d like a financial healthcheck or to discuss any of the above issues and how they relate to your business, then get in touch with me on Emily@growthbuilders.io


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