Question: What is one pro or con to outsourcing your financials early in your startup?
Con: Wasting Money When You Can DIY
"Early on in a startup, it makes sense to use a CFO for quarterly tax contributions and yearly filings. Overall though it does not make sense to have your AP/AR outsourced. Keep your day-to-day processes internal until it outgrows you. This helps you understand the complexities of your model from the onset and helps you understand if it can ever be outsourced or if it's better to staff internally."
@mspinosa
Con: Costs You a Learning Experience
"Outsourcing your financials is a great way to go about the business of making money, whilst someone else manages your books. The problem with anything that's outsourced, however, is that you're unable to physically monitor the progression of these activities (and learn about your business). It is still more profitable to get a report from someone who understands the numbers."
@codymclain
Con: You Can Only Manage What You Measure
"Entrepreneurs and hardened executives both agree that "cash is king." It's one of the few truisms of business. You might have the best idea and a great team to execute it, but if you don't have cash, you'll go bankrupt quickly. When you first start your business, cash is scarce. You need to understand the return on every dollar you spend, and be quick to redeploy it where there is leverage."
@MosesOfWatches
Pro: Focus on the Product
"I made this mistake early on and after 12 months of having no financials and no books, the IRS came knocking. Outsource your accounting and bookkeeping so you can focus on the product and growing sales. You're not an accounting expert. Starting out, for maybe $50-$100 a month someone can get your books done locally. Trust me; outsource it. "
@chrisbrisson
Con: Losing Awareness Around Key Business Factors
"When you're early on in a startup, you're doing a lot of testing around business models. You need to understand the key factors that determine your growth and profitability. While it's fine to lose money initially when you're starting, you need to understand how much you're comfortable losing. Otherwise you're going to find yourself running out of money quickly before proving viability."
@mattangriffel
Pro: It Keeps You From Doing It
"It took me a few years to figure out that I have no business doing anything at which I'm not excellent, and my firm doesn't know how to hire or manage someone who could do it internally. Outsourcing ends up being cheaper because you and your people focus on their strengths."
@johndillard
Pro: Reduces Your Decision Making
"One pro is reducing your decision making and learning curve. I suggest outsourcing your basic bookkeeping and writing (or approving) your own checks to vendors. This way you have a handle on your business expenses while freeing time and headache with regards to bookkeeping. A simple online bookkeeping service should do the trick."
@theFaraz
Pro: Avoid Pricey and Possibly Dangerous Mistakes
"By outsourcing your financials early on when building a startup, you are avoiding pricey and possibly business-threatening financial mistakes. Unless you or your partners are extremely well versed in the financial industry, it is possible that you may overlook important financial elements, which could definitely put you in the hole. Financial expertise is worth looking into for that reason alone."
@milesj
Con: Missing Vital Business Signals
"A huge con to having someone else prepare your financials is the increased possibility of not staying on top of your numbers and financials until you get the financials complete. This delay may encourage you to miss signals and/or not act on signals because "someone else is handling it" during a critical period for your company. If the issue is too big, your company could be irreparably harmed."
@admitme
