Prior to starting at DiUS as head of finance, Emma Crowl went on the startup journey with Doddle in the UK. She was hired on day one of Doddle and spent nearly three years as Financial Operations Director learning what it takes to be a successful financial operator in the startup space. Finance may not have a reputation for being exciting, but Emma’s passion for all things money challenged this notion when she shared her knowledge and experience at a Startup Bootcamp, ask me anything recently. Her key takeaways:
Nail the basics
The first question I was asked when I started at Doddle was: How do I claim expenses? While this wasn’t the hardest hitting question I’d ever had, it showed me that even on day one you need to put some basic processes in place to ensure that the company runs smoothly while you’re tackling the bigger issues.
The second question I was asked came from the CFO: Where do we start? So first I built a Chart of Accounts with lots of built in flexibility so we could adapt as the business developed and changed. This really helped to give structure around how we would track the business progress and ensured we knew where the money was spent from the start.
At first it was all about spending money not making it, so we put a basic accounts payable process in place to engage with suppliers. We included a one page explanation of how we were funded and who was backing us to help demonstrate to suppliers that we were a safe bet and help us get around the fact we didn’t have a credit history yet.
Mess don’t scale
When you’re building up systems, processes and procedures, you should always ask yourself: will this scale? Financial mess doesn’t scale well, so concentrate on getting the processes right. Have safeguards in place to ensure things won’t slip through the cracks, but don’t over complicate things, as it will only slow everything down and people will just work around the process and you will end up losing control.
Think commercially, not technically
The finance people you need in a startup have to be the kind that are along for the ride and willing to do anything, even if it is not “technically” finance related. They have to be comfortable with risk and understand that you need to be spending money to make money.
You don’t need a technical accountant as your CFO in a startup you need a commercial one. The people making financial decisions need to be across every aspect of the business and its priorities, they can’t simply be about balancing the budget.
However it’s also good to have somebody in the team that is good with the technical stuff to make sure you are crossing your t’s and dotting your i’s. This is will be important if the tax man asks questions or you need to provide financial information to current or prospective investors.
This advice goes for all hires you make, take your time, hire people who are made of the right stuff for a startup environment because corporate experience doesn’t always transfer into startup world!
Don’t take the money just because you can
It’s tempting to take all the money that’s being offered, but don’t take more than you need just so that you have it in the bank. It’s the quickest way to put a lot of financial stress onto your new business and yourself. When pitching for funding you should consider what you need rather than what you want, it’s about getting the right balance.
Read the fine print on what you are actually signing up for, know when interest and repayments are going to start, look at securing funding with drawdown milestones so you are not paying interest on money you don’t need yet.
Once you have the money, it’s all about managing it. You should be tracking your cashflow weekly, adjusting your financial/cashflow models continually for all changes and pivots you make as a business. Question all assumptions and revisit them to make sure they still hold true.
Keep it simple, and spend money on the important things
At first you will be rushing around trying to do a million things at once, maybe not making a proper assessment of where you are spending your money. Ask simple questions like: Will spending this money help push us forward? Is it going to help achieve our goals? Is there a way we can experiment first before we commit large amount of funds? Do we really need to spend $$ on making our office look super cool? When it comes to processes, when a spreadsheet will do, use that rather than an expensive IT system.
Beware the rut
You would be surprised how quickly people get into habits. I heard more than once, “We always do it this way..” — we had only existed for three months!! If you are going to get into a habit then you may as well make it a good one. Company culture develops quickly, so make sure you are focusing on what you want yours to be from day one.
Failure was a good teacher when it came to finding a collaborative decision making process at Doddle. We tried several different approaches, the one we settled on was a balance between a small exec team and a larger management team. The exec team made sure all opinions were heard and debated in the management meeting, but ultimately the management team made the final decision. The most important thing we found was to be clear on how and by who decisions were going to be made and the communication of the decisions and the reasons why to the wider group.
Across the board, when people put systems in, there’s a tendency to forget about how you will be able to report and what access you will have to data. Always focus on what information you are going to want to see and how you will get it easily in the planning stage, as this will be what you need to help you make decisions along your journey.
In a start-up you’re making a lot of decisions and often they are decisions you’ve never made before. As much as you can put P&Ls and budgets in place, at the end of the day you make the best decision you can with the facts you have. Get as much information as you can as quickly as you can then just go with your gut. Respect each other but create a space where nothing is off limits and you can say anything.
As leaders of your business, you will be making many decisions every day. The ones I found who made the best decisions were the ones who were not scared to look stupid and put their hand up and say that they didn’t understand something or ask for an explanation.
DiUS is a proud mentor and supporter of the Energy Australia Startup Bootcamp 2018 cohort. This arm of the program is especially exciting because it tackles the energy sector which, as everyone knows, is an area being disrupted massively by tech. There’s currently room to make an impact with technology and help in the mass transition to renewable and clean energy. It is a core value at DiUS to leave the world in a better way than we found it and supporting this program and these startups is just one of the ways we do that. Follow the journeys of the startups here.