While entrepreneurial ventures inherently carry risk, one of the most effective ways to reduce that risk is to tap the expertise of a certified public accountant. It’s always a challenge to create accurate financial forecasts, but it’s none the less essential to not only have accurate numbers, but to know how to interpret the data.
Here’s the rub: A startup serves up inherently fluctuating numbers. Do you really want to be scratching your head, trying to make sense of multiple spreadsheets, when you really should be steering innovation and product development?
That’s why a Certified Public Accountant should be brought onboard your startup team from the very first brainstorming meeting. What it really comes down to are dreams. Inventors and innovators must have the capacity to envision those dreams and convince backers to front money.
Visionaries like Steve Jobs may not be number crunchers and instead tend to focus on the big picture. What can happen without an anchor onboard — such as a CPA? Flights of fancy will fill those dreams with too much hot air. The startup achieves lift off, but without hard financial data the balloon may run out of lift long before the cash flow reaches a point of being able to sustain the nascent enterprise. When the hot air of false hopes evaporates, often the enterprise fails.
An accurate pro-forma will anchor those startup geniuses, pulling them back to earth. It’s also critical that an outside neutral party is onboard to reflect back reality to management. The point is not to quench the dreams, but to build a solid financial underpinning so those dreams will come true.
It’s the rare startup indeed whose founders truly understand the critical role a CPA can play from the very first business-formation meeting. Time saved by not chasing mirages ups the odds that a startup will actually succeed.