Original content provided by BDO Canada.
Businesses in the scale-up stage often overlook the financial and accounting functions within their organization. Scaleups are typically more focused on building their business and raising capital and tend to view financial reporting as compliance. But this thinking can damage the business further down the line, especially when it comes to financing. Proper financial reporting will help your investors have confidence in your business, which will help you raise money and keep investors on board should you need to raise funds again.
In this article, we look at key accounting challenges businesses face while scaling up. We also outline solutions and best practices so your business can avoid making the same mistakes.
Firstly, let’s look at the differences between a company in the scale-up stage versus companies in the start-up stage.
What’s the difference between a startup and a scaleup?
- Startups - Are at the very beginning of their life. Startups typically have very little formal structure or processes in place, but they’re meant to be that way to allow for a deeper focus on innovation.
- Scaleups - Are, simply put, just a successful startup. The company has likely hired a number of permanent employees, has generated sales (or at least has been able to prove that its product or technology works on the market), and has probably started to raise money from outsiders.
BDO works closely with many clients in the scale-up phase and have identified four common accounting and finance challenges these companies frequently face—often costing them time and money.
Next steps
As a scaleup business owner, you don't have to prioritize accounting decisions over business decisions, but it helps to learn about their impact on each other. This can help you negotiate more effectively.
BDO can help companies handle the financial complexities that come with scaling up, and ensure hard-won growth translates into real value.
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