No Accounting for Startups

http://steveblank.com/2010/02/22/no-accounting-for-startups/

by dskhatri • 16 years ago

103 34 16 years ago

ledger1233• 16 years ago

Really sound advice.

When I started my small business many many years ago, I kept records/folders like a big company, maintained books like a big company. This was what I had read in books on how to run a business.

Couple of years later, I read a book on simplicity/time management. This changed everything. I slapped on my face and got rid of almost all useless formalities of running my business.

Even though I support SQL-Ledger (open source) as part of my business, my own use of accounting software limited to bare essentials.

michael_dorfman• 16 years ago

"Pay attention to the right metrics" is always good advice.

jasonlbaptiste2• 16 years ago

Someone needs to be make insanely insanely simple accounting software for startups. I just don't see it out there. I don't want a bunch of crazy financial info and options. I want to tell you what I spent money on, when, and what it was. I also want to tell you how much came in, from what, and when. That's it. Anything else is generally a waste of my time at this point.

asmithmd1• 16 years ago

Have you tried mint.com? It will automatically categorize payments based on who you are paying

jfarmer• 16 years ago

Accounting, not personal budgeting.

Sukotto• 16 years ago

I like mint for general, personal money tracking but would not use it for anything like a business.

I've found it too unreliable and inflexible to be anything more than a supplement for my needs. They do not track all institutions, their ability to login to systems frequently breaks (for me), I find their "trends" charting really lacking, and you cannot add your own documents.

joelhaus• 16 years ago

We need a Mint.com for small business. It's simplicity and automation blow away the competitors.

The best part is that it learns how to categorize your transactions.

It is missing invoice and payroll functionality in it's current form, but it really is so close to being the perfect accounting software for SB.

johns• 16 years ago

I thought that was the goal of http://lessaccounting.com/. Anyone have any experience with it?

jasonlbaptiste2• 16 years ago

less accounting is great and I've met one of the cofounders who is a stand up guy. problem is, it still operates within the confines of accounting software. Within those confines it's certainly simple. someone just needs to rethink the entire notion of it. I don't need accounting software.

there• 16 years ago

i built corduroy (http://corduroysite.com/) after getting fed up with trying to use quickbooks for my small business, and most other web-based apps at the time were just project management or invoice creation.

i use my business debit/credit card for almost everything, and send checks out for my monthly bills. with corduroy i can receive a bill, print a check for it, and then automatically download the transactions from my bank to mark that check cleared, and quickly categorize all of the new debit card transactions. at tax time, i just go through each of the categories and put the totals into the tax software.

of course it does invoicing and project management, too.

toddh• 16 years ago

You'll also need income stmt & balance sheet to prepare the annual tax returns.

resdirector• 16 years ago

I use a spreadsheet to do my record-keeping. I have multiple sheets that do: cash flow, the balance sheet, income and expenditure (double entry), and profit & loss. Everything's linked together nicely: e.g., if you make a new transaction in the income sheet, it will be reflected everywhere else. Insanely simple. No need to use MYOB etc. Can copy the data out and paste into Matlab, Mathematica etc.

Message me if you want a copy of the template.

joseakle• 16 years ago

i can put it up on google docs or my public dropbox if you let me and share it with everybody here

c1sc0• 16 years ago

can't message you but I would be interested

savrajsingh• 16 years ago

Yes! This is a huge, huge problem. I just installed Quickbooks 2009 -- 2010 is fraught with problems (see amazon reviews) so my accountant recommended 09. 2009 REQUIRES me to pick up my phone to register the software -- I dialed, was on hold, and then hung up. It also couldn't open an existing quickbooks 2009 file because it needed to download a 300MB maintenance release... Quickbooks 2009 is like Microsoft Streets 98. Someone needs to make it completely obsolete by writing Google Maps.

euroclydon• 16 years ago

2009 is bad? I installed 2008 on Vista, and the screens would hang for several minutes at a time. I remember it being very fast in the past. I had the opinion, based on nothing in particular, that QB was ported form C++ to .NET, and it didn't go too well.

eande• 16 years ago

I met some of the people from Docsnaps.com showing of the automated bookkeeping website. I think for an early startup the service can be real helping hand.

gcv• 16 years ago

Have you tried Ledger (http://wiki.github.com/jwiegley/ledger/)?

ledger1233• 16 years ago

May be I am gone make some changes to sql-ledger to make it this much easier (and release open source). Stay in touch. (See my info)

arethuza• 16 years ago

This makes me much happier about all the times I sat through board meetings wondering what the hell the point of most of the financial reports were.

grellas• 16 years ago

This is a very insightful piece (typical of this author).

One inherent limit does exist, though, concerning startups that get VC funding. A routine provision concerning the "information rights" that VC investors insist upon receiving states that the company shall provide periodic financials in accordance with GAAP. This means very formal and audited statements.

For startups that do an early Series A round, then, there will always be a strong tendency to focus on the conventional financial statements, regardless of the business model. Not that this is bad in itself, but it is a fact of life for such companies.

maurycy• 16 years ago

I'd be even more drastic.

I'm a huge fan of objectives, key results.

There's a decent description of this approach from Pincus himself:

http://www.nytimes.com/2010/01/31/business/31corner.html?pag...

goodwinb• 16 years ago

I'd like to ask what is everyone using for accounting? Anyone have an elegant solution? Does anyone's web app hook into one of the online accounting apps using the accounting app's API?

traskjd2• 16 years ago

We have been using Xero (www.xero.com) and absolutely loving it for several years. They are web based and have an API.

They're getting pretty popular in New Zealand (we're they and we are based) but also gaining traction in Australia and the UK. They have a US version available as well but marketing seems to have been focused outside the US so far.

They're a listed company here in New Zealand so I expect they'll be here for quite some time.

Estragon• 16 years ago

I wonder whether anyone has devised a similar set of metrics for scientific research. That would be a very interesting discipline to follow.

traskjd2• 16 years ago

http://www.xero.com

We have been using Xero for our business since day 1 about 3 years ago. Web based, has an API, multi-currency support, automatic bank feed downloads (depending on who you're with) and other great features make it a very solid offering.

It has made accounting an "it-just-works" aspect of our business. It's been wonderful and I would strongly encourage any startup to check it out. I can reconcile our transactions in about 2 minutes a day (literally). I cannot sing high enough praises for something that has saved me so much time and somehow actually made accounting fun.

sleet• 16 years ago

I second xero, it's fantastic. Try before you buy, they have a demo company you can trial with before purchasing.

ahi• 16 years ago

He keeps saying that a cash flow statement is unnecessary but then includes it in his requirements? I agree income and balance statements are useless for startups, but a cash flow analysis will tell you precisely when you won't make payroll.

char• 16 years ago

This is really great advice. My first start-up was seed funded by some 'big-business' people. They told us we had to spend a lot of time writing up business/financial models, including 5-year plans(!?!). As a result, we spent very little time developing and iterating on the actual product. We had a feeling this didn't make much sense, as our idea evolved every day or so, and thus so did the business 'plan'. But we didn't have the confidence or experience to stand up to the people who gave us money.

On my current project, we are frequently testing all types of methods and keeping/improving what works. It makes so much more sense.

trafficlight• 16 years ago

I just found http://outright.com/ Looks promising. It's free and it imports my Freshbooks invoices.

bramstein• 16 years ago

Can anyone recommend a good online accounting application for small businesses in Europe? Most of the ones that are mentioned here are quite USA centric. Tax requirements in Europe are a bit different, which I guess also presents a problem as they differ from country to country.

I'm trying to find something that works with the Danish tax system (where I currently live), and the only one I have found so far is: http://www.e-conomic.com/, but it seems a bit heavyweight for my needs (small freelancing business.)

ledger1233• 16 years ago

Taxes in sql-ledger are configurable. You can add taxes with %ages etc. A large number of people are using it in Europe.

SQL-Ledger has really helpful user community behind it. I would suggest you to join the mailing list (http://bit.ly/bsCbV5) and ask your questions about your concerns there. There must be someone with Danish experience.

mme• 16 years ago

Hi, was interested to see your comment on E-conomic - in fact I've found it works very well for small businesses and freelancers. It does have a lot of functionality but you can simply choose to use as much or as little of it as you need.

tvn• 16 years ago

Why not see for yourself if mme is right? (he/she is!)

e-conomic is very flexible, with a lot of smart and complexed functionality if you want to use it, but you also have the option to keep it simple :-) it its your decision!

You can take a free trial here: http://www.e-conomic.dk/regnskabsprogram/demo/ and your have the option too choose english language in the userface.

Cheers Tejn Vanting Nielsen tvn@e-conomic.com Danish Country Manager e-conomic

No Accounting for Startups

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