It’s a well-known fact that virtually all tech companies lose money in their early stages. Because of this they need to be getting the best advice possible on how to transition to profitability. Then, when they have a plan, they need to be able to monitor progress against it and reforecast when required. Having an accurate medium and long-term cash flow forecast is crucial here – so funding requirements are identified early, and steps are taken to raise that finance.
A lot of tech companies work from a subscription-based model. Once this has been set with customers it’s not easy to increase prices. This means that a pricing strategy is key. Whilst discounts to early stage adopters is a given – the future ongoing price has to be clear and calculated both from a return on initial investment perspective and from the perspective of future support and development time.
Development is often sourced from overseas. Because of this, it’s prudent to agree remuneration in GBP as this protects against exchange rate fluctuations. If that’s not possible, businesses should take out future contracts to secure favourable fixed exchange rates.
We also understand that tech companies don’t want to work with archaic accounting methods. So, we make sure we’re always on top of the latest innovations and apps to make sure that the solutions we recommend will integrate well, keep things simple and automate as much of the process as possible.
In summary, tech companies starting from a loss but gearing up for big profits need an experienced finance director to help them through. They also need to have real time, accurate accounting information so that decisions are made using the right data.