Receiving outside funding is a major milestone for any business. For many startups and founders, it represents the light at the end of a very long tunnel.
But securing a cash infusion isn’t the end of the journey. It’s a stop along the way, a huge milestone worthy of celebration. But it isn’t the end by any stretch of the imagination.
After funding, there are other goals to achieve. In fact, investors invest both because they want to make that journey with you and they want to see some return on their investment.
Here are six critical financial questions you can ask after receiving funding.
After reaching such an important milestone, assess your startup’s current status. Take a step back from the business to try getting a 360º view of where exactly your business is.
Do a deep dive into your financial and other metrics. Example questions to ask yourself are below:
If you’re not set up to pull the info directly from your systems, ask your accountant to get you set up to do that. A clear financial picture is invaluable.
When bootstrapping, instead of investing the company’s limited capital, sometimes founders take a ‘do-it-yourself’ or ‘do without’ approach to outside tools. While that may help you conserve capital in the short term, it may not be the best approach once you receive outside funding.
Now is a good chance to look at what products or services would add value through efficiency and productivity gains.
Maybe your finance team and financial systems are dated (or nonexistent) and not ready to scale with you. Perhaps they can’t provide the necessary information to help you make data-driven decisions. A CRM tool might allow your sales team to better manage your customer relationships.
The bottom line is that your investors want to see a return on their investment. Sometimes, in order to scale up your operations quickly, you’ll need to invest in tools that help you do that.
Outsiders often picture startups as pure chaos. Maybe there’s some truth to that.
But in the long run, chaos and break-neck speed won’t help build a successful startup. But proceeding intentionally just might.
Where do you see the biggest long-term growth potential? How do you want your organization to look? What products do your customers want the most?
Analyzing your current situation and the market as a whole, and backing up your decisions with facts and figures can help you make better decisions for your business.
Benchmarking against your primary competitors can also provide insight on what to do (or not). How do your best practices line up against theirs? What other decisions and investments can you make to help you get to where you want to go the fastest?
Deciding where to go next can also mean stopping certain activities. If you’ve been providing services that help pay the bills but aren’t part of your model for scaling up, maybe it’s time to stop?
Make sure that wherever you decide to go, you and your team think before you act, making deliberate, data-driven decisions.
Is your team complete? Are you covering everything that needs to be covered?
Funding can make it possible to hire for key roles. What skills does your operational team need? Which capabilities should your management team have?
If you’re missing someone, hiring is often the next logical step. But first, it’s important to discuss what you can afford in terms of compensation and benefits with your accountant.
Hiring should always be done carefully and never rushed. Employees can be expensive. And hiring the wrong people can end up costing more than just their salary and taxes. At best, the wrong hire can slow your growth. At worst, they can even poison company culture.
Are you focused on your customers and providing what they want? Or are you focused on yourself and your company’s internal interests?
A healthy portion of both is key, but too much internal focus can sometimes be a significant factor in companies that fail.
To gain some external focus, you should talk to your customers. Ask them what they want and need, and then use those insights to prioritize your company’s next steps.
But you can also look at what the numbers say. Get as detailed a picture from your accounting system about your customers and their behavior. Who’s buying which products? Do they keep coming back for more? Is your customer churn stable? Are you consistently increasing your customer lifetime value (CLTV)?
Securing external funding is a major achievement, congratulations! But it’s by no means the end of the journey. Even funded startups can fail; many of them do.
Establishing transparency and control of your finances and financial figures can help you ensure you’re driving the most value with your investor money. An experienced financial partner can help you achieve financial clarity with systems and processes designed to grow with you and your team.
If you’re interested in seeing how a better accounting system can help your business succeed, set up a free consultation with one of the startup experts at Founder’s CPA.