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A CPA’s Perspective: Why You Should (or Shouldn’t) Work with a Startup

Posted by Cinnamon Williams to Inside inDinero, Accounting, Business

CPAs weigh the pros and cons of working with startups

 

Whether you’re evaluating a business partner or hunting for a new job, you have a basic choice to make first: Do you want to work with an emerging or an established company?


Depending on your perspective, the startup world may seem vibrant, creative, and teeming with opportunity… or volatile, superficial, and rife with mismanagement. As a matter of fact, the same characteristics that look like benefits to one person may look like drawbacks to another.


For a CPA, these bilateral positives and negatives appear especially stark. When your job is to say, “No, we can’t do that,” you’re frequently at odds with the innovative, fast-paced, “yes, and…” culture we associate with startups. The experience can be at once frustrating, overwhelming, demanding, and fun. It could give you a whole new outlook on your role as an accountant or send you running for the cubicle-laden hills. 


Take a glimpse into an accounting career at a startup versus a large business:

 

Being a CPA at a Startup is Never Boring

There is, of course, no such thing as a “typical startup.” But when contrasted against large, more stable companies, early stage businesses typically have a few things in common.


For one, startups are exceptionally dynamic environments. As a CPA, you’ll constantly need to answer new questions and deal with unfamiliar situations. From reconciling cap tables for investors to planning for quarterly taxes, your responsibilities vary on a monthly, weekly, and even daily basis. You have to cultivate a sense of comfort in the unknown. There’s often no predicting what you’ll be doing next year, let alone three years from now.


Life at an established firm, on the other hand, can get too comfortable. Because you can access years of metric information in order to evaluate performance, you understand exactly how the numbers should behave. That means you can not only predict patterns well into the future, but know where to look when there’s an issue and what steps you need to take to rectify it. Consequently, the role can easily become routine. You may stop questioning your approach or considering different ways to analyze the data, and as a result, you’ll no longer perform or serve the business to the best of your ability.

 

Be Ready to Take the Lead

An accountant at a large, recognized, and secure company has a much different scope than an accountant at new and unproven venture. Those of us who work with startups don’t spend as much of our time filing financial reports; instead, we’re developing the reporting methodology. A startup’s CPA often acts as a management accountant and internal auditor, reviewing statements with one eye on accuracy and the other on efficacy.


It can be tough if you don’t have all that much data to work with (which is almost always the case), and the company’s leadership team has ambitious goals (ditto). Numbers need to tell a story in order to woo investors and placate the company’s stakeholders, but that story must be factual. Accountants don’t create fiction. At the same time, the company’s chief financial officer may disagree with the way you’ve chosen to structure the story. It’s a constant balancing act between creativity and compliance, big dreams and hard truths.


And, again, here’s the interesting thing about startups: no two are alike. Not every small business in the midst of rapid growth is part of the technology industry, based in Silicon Valley, or working its way toward an IPO. Just as demographics, lifecycles, aspirations, bylaws, and relationships vary from startup to startup, so too do KPIs and SLAs.

 

You’ll Have to Push Back—a Lot

I remember once speaking to a group of executives who were looking for financial guidance. Although their company had recently expanded, it had started to lose money, and the team wanted to curb spending but keep the momentum going. I told them they needed to develop and implement internal systems of control.


They ignored the advice, assuming the business could operate faster and more efficiently if financial decision-making wasn’t tied to controls. Two years later, they wound up in debt and out of business.


By our nature, CPAs are risk-averse—we’re designed that way. Entrepreneurs, however, are not. As an accounting professional working alongside other members of a startup, you’ll no doubt find yourself straining against a constant, company-wide desire to accelerate and move quickly. It causes you to contemplate what “risk” truly means. Rather than simply wondering, “How risky is that?” You’ll need to consider whether it’s a material risk, a situation that could actually become detrimental to the company and the people it serves.


Startup accounting is kind of like buying a car. Every decision is a negotiation. Beyond keeping executives on track with deadlines and reporting requirements, your function is to ask questions: Is that going to be cost-effective? Can we navigate a lower purchase price? How do we create better reporting to determine ROI? In one sense, a business can benefit from someone who’s resisting and poking holes in impractical ideas, but this approach can wear on all parties if an agreement takes weeks to reach.

 

You’ll Need the Right Blend of Experience and Personality

Yes, you do need experience to work as an accountant at a startup, particularly if you’ll be at the helm. But I’m not referring to experience with startups or experience as a controller. You’ll need auditing experience. Auditors are skeptical—they never stop asking questions, and they know the right questions to ask.


If I were hiring a CPA for a startup, I would prioritize experience in the particular trade over startups as a whole. Some foundational knowledge of specific industry technology and best practices keeps you conversant and maximizes your value in highly specialized fields.


Personality is another key factor. Accounting is accounting: ultimately, you can learn the profession and the industry, but what it really comes down to is commitment, work ethic, and a willingness to do what the job requires. I think of myself as someone who knows how to roll with the punches, and even I find startups challenging—extraordinarily rewarding, but challenging nonetheless.


All of which is to say: there’s never been a more exciting time to be an accountant. The startup world is changing every day, and I feel fortunate to work with so many fascinating and passionate people as we discover it together.

Ready to join us?

 

Download The Entreocracy Manifesto by Jessica Mah, CEO of inDinero


Sources:

http://www.accountingtoday.com/news/audit-accounting/working-in-accounting-for-a-tech-startup-75999-1.html

https://bigfuture.collegeboard.org/careers/businessand-finance-management-accountants-internal-auditors

http://www.fastcompany.com/1824235/8-reasons-choose-startup-over-corporate-job

http://goingconcern.com/post/heres-why-there-won-t-be-uber-accounting

http://lavoiepllc.com/startups-take-note-solid-accounting-strategy-key-success/

http://blog.aicpa.org/2012/07/cpas-the-startup-community-needs-you.html#sthash.euXxWTgx.dpbs

About the author
“Cinnamon

Cinnamon Williams

Success starts when you take charge of your finances.

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