Startup Finance & Accounting 101: A crash course for founders :: with Veronica Sagastume
In this episode of Ventures, my guest Veronica Sagastume (https://www.linkedin.com/in/veronicalsagastume/) and I talk about all-things startup finance and accounting. From the perspective of what founders need to know, this episode ended up being a crash course in the various high-level aspects of bookkeeping, accounting, controller work, fractional CFO work, tax prep, legal considerations, and finance operating suggestions. Veronica’s firm (https://www.fortifiedaccounting.com/) works with funded, early stage startups and she makes a compelling pitch for why you should seriously consider hiring a firm rather than individuals in the early stages of your funded business.
1:52 - General tee-up for the conversation and why why understanding startup finance matters
2:47 - Veronica introduction and background, story, and what she does now
5:46 - Finance operations in a rapidly growing new business are often overlooked (or not buttoned up as much as they should be). What’s the “Finance 101” for startups and when should founders hire help?
11:48 - Last ~5min of conversation is worth re-listening to, but - first question - what is GAAP accounting? https://www.investopedia.com/terms/g/gaap.asp
13:45 - Will Xero or Quickbooks online help entrepreneurs with the basics of GAAP accounting?
14:20 - Example of purchasing a piece of equipment that is $25k.
16:14 - Suggested order of hires – Veronica suggests hiring a firm and growing into them.
19:14 - Analogy of someone doing a large remodel or construction project, better to hire someone to run it all for you, if you can afford it.
20:09 - Traction and having the cash is key so you can hire a proper finance and accounting firm.
22:38 - Lessons after 15+ years in the startup space. If you can hire a firm, do it.
23:12 - Importance of having a regular monthly meeting to go over your books. Quick lesson on the P&L (income statement), balance sheet, and statement of cash flows.
28:00 - Amazing to have a group that can get you finished books quickly after the beginning of the month. Also, thoughts about financial modeling.// See also https://www.startuprocket.com/articles/startup-financial-modeling-part-1-what-is-a-financial-model
31:50 - Coming back to the overall framework: bookkeeping, controller, accounting, “CFO stuff” - does Veronica’s firm do all this? Even tax prep?
33:52 - The role of controller. What does it look like working with Veronica’s firm from the role of the controller.
37:14 - Will Veronica’s firm also run and manage payroll? (Also, thoughts about prepping a company for an exit strategy / data room)
41:37 - More about data rooms
42:40 - How Veronica’s firm builds data rooms from scratch as they go.
43:20 - How should founders think about finance best practices to be properly compliant (financial controls).
46:50 - Talking more about the accounting and “CFO stuff” // What is the approach that Veronica’s firm uses when working with clients?
53:03 - Tax prep strategies // what should founders be looking for to ensure their firm is doing the right things?
44:33 - Early November tax strategy meeting / how to work with the tax prep folks?
57:50 - Highly recommended to have this meeting before Thanksgiving.
59:00 - What are the types of things that Veronica will bring in the expert accounting / legal folks?
1:00:41 - Stock options vs. RSUs? https://smartasset.com/investing/stock-options-vs-rsu
1:03:28 - Smart use of Loom videos (https://www.loom.com/).
1:06:50 - Prota’s purpose and the various ways to holistically invest in founders.
1:08:50 - Best social network to use to contact Veronica → https://www.linkedin.com/in/veronicalsagastume/
1:09:00 - When is the right time to talk to Fortified Accounting?
1:11:13 - Last tip: find a good banker, insurance person, finance firm, and lawyer.