What are some good financial planning tools for startups?
What state of the art financial planning tools are available for a software startup? Should we use either excel or google docs templates or maybe some good cloud software? Thanks.
To find the simplest financial model tool for your startup you have first to know what are the key options this financial tool should offer you.
The financial model is key to your startup success, so you have to start to tackle this financial problem with the simplest financial tool ever.
The best start is joining with other business people through your Local Chamber of Commerce. Ask for their tech person favorites! Applied knowledge and current references are the best sources. Your local organization of Financial Planners usually has the type of info; and current financial planning Industry journals would be a good source of information.
Many financial software solutions have both your daily financial functionality necessary to run your business as well as planning tools. Even something as simple as Mint.com has some planning. It really depends on what type of planning you are doing. Is it operational, for you own measurement of your business? Or do you need high quality financial statements for investor business presentations?
Apart from Business in a box, what helps are things like Business Canvas, Pitch Canvas and obviously if at mid stages of product development, all the tools mentioned within the Lean Startup, by Eric Ries are very valuable tools to use.
I personally would go with Linx software as it has fewer viruses and much less hackers.
It is easy to learn and use, and is similar to windows.
You should have a wall where everyone pins things that mattered to them over the day or week and see the connections based on their aesthetic intuition. Get a camera and share it online - be organic & be different
The first thing I did when I went into business for myself nearly 30 years ago is to develop a seemingly simply but highly telling Excel spreadsheet. All it is is a checkbook estimator. It projects cash flow out as far as you like. One of the biggest problems you have as a startup or one man show is trying to handle predictable expenses along with unpredictable income. All the spreadsheet does is start with your cash position today and put expenses in each day when they fall and make your best guess on when and how much your income will be and when it should fall. It helps greatly in evaluating what specific spending choices will do to you cash flow, i.e. can I afford this? Not state of the art, but I strongly recommend it.
I studied management with a concentration in finance at university, but the last 20 years of having my own businesses have taught me more than my corporate jobs budgeting and forecasting.
The strategy and know-how that go into a tool are much more important than the particular tool. Y'know "garbage-in, garbage-out." In my opinion, the most important thing for a start up to plan for is cash flow. That is what will either kill you - or allow you to survive long enough - to become what is referred to as a 'going concern.'
Relentlessly forecast your cash situation, realizing that sales may not have anything to do with 'cash in' or profit. What are your collection terms? Can you get paid up-front, by taking credit cards (well worth the cost, in my opinion)?
Realize that most startups are ridiculously optimistic in terms of how long it will take to be profitable. That's just human nature. Successful entrepreneurs balance their natural optimism with a strong realistic streak.
At the risk of sounding ridiculous, in my experience, electronic spreadsheets make it easier to be wildly unrealistic. I always write down projects first on a whiteboard, then using old-fashioned paper, when working with others to come up with realistic numbers. THEN, they go into software. Otherwise, often people 'solve' for revenue numbers that will support the expense level they envision.
Accounting software only tallies what has already happened. While it may be necessary from a tax prep point-of-view, it's not a forecasting tool for a startup.
Best of luck!
"The Business Quarterback"
P.S. If you'd like to get my weekly strategy newsletter (complimentary), you can sign up here: http://www.marileedriscoll.com/subscribe/
For start ups and SME's I think you have to go a long way to beat two tools:
Xero for accounting, reconciling bank statements and payroll as well
Receipt Bank for taking images of all invoices paid, coffees/lunches bought meaning you don't need to keep/find paper receipts at the year end
Declaration - at CBC we use both of these!
There are several items you will need for good financial planning, and I have FREE templates to guide you through your Business Plan, and Financial Statements (Balance Sheet, Income Statement, and Cash Flow Statement). For you FREE templates click on the following link - http://budspracticalaccounting.com/resources/free-downloads/
Also, I have written two business books that will give you good reference material for planning your start-up company; Cover Your Nut - Practical Accounting in Plain English and The Business Plan and Beyond - Beginner's Guide Book. Both books are available on Amazon in either a paper-back format or the Kindle (eBook) format. http://www.amazon.com/R.G.-Bud-Phelps/e/B0089GZ2U0/ref=ntt_dp_epwbk_0