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7 ways to improve your startup’s financial wellness

Open to anyone with an idea

Microsoft for Startups Founders Hub brings people, knowledge and benefits together to help founders at every stage solve startup challenges. Sign up in minutes with no funding required.

Today’s guest post comes from Emily Jorgens, Head of Business Development & Partnerships at Ramp. Previously, Emily led business development and partnership efforts for Uber’s Driver Loyalty program, Uber Works, and Uber’s international scooter partnerships. Emily holds a B.S degree in Economics and Biology from Duke University.

When launching a business, it’s tempting to spend all your time focused on improving the product or service that you’re bringing to market. But successful founders know that it’s just as important to spend time in the early days building the financial foundation of the organization.

Concentrating on your startup’s financial wellness during its nascent stages can alleviate stress later, and better set your company up for health and longevity. In today’s uncertain economy, the more security you have around your company’s finances, the better your odds of success.

How to improve your startup’s financial wellness

While the best approach to improving your company’s financial wellness may vary based on its industry and business model,  there are several best practices that every startup can implement. Read on for seven steps you can take to improve your startup’s financial wellness immediately.

1. Cut back on wasted spend

If you’re not tracking your spending, it’s easy for expenses to fall through the cracks. Even small, unnecessary expenses like unused subscriptions or duplicate invoice payments can add up over time and become a significant drain on company resources. One way to manage such issues is by implementing clear spending guidelines and a tool for real-time expense management, which allows you to control and approve spending before it occurs.

2. Lengthen your runway

Cash flow challenges are among the top reasons that small businesses fail. By keeping additional cash on hand, you can better equip your startup to make it through today’s current volatile economic conditions. Not sure how much cash you need? Start by calculating your burn rate. While it’s normal for startups to be cash flow negative in the early days, the more you can reduce your burn rate, the more breathing room the company will have to deal with market changes or other challenges. Plus, a lengthier runway can make your company more attractive to potential future investors, providing even more financial security.

3. Utilize real-time reporting

Large companies have the luxury of collecting and analyzing their financial records on a monthly or quarterly basis, but real-time reporting is critical for startups. Dealing with financials in real time makes the process instantaneous and can be transformative for a business. The ability to make decisions quickly—with the most up-to-date information possible—can be a competitive advantage in today’s fast-moving market. By viewing transactions as they happen, you can quickly glean insights that you can use to improve your company’s financial picture, generate spend forecasts, and create month-over-month analyses to plan for costs and identify expense areas that need attention. Plus, by consolidating all of your spend onto one platform, you’ll have the ability to view your total expenses in real time.

4. Negotiate with vendors

A key step in lowering your overall spend is by reducing the amount that you’re paying individual vendors. One recent study found that by cutting supplier costs by 10%, companies could improve their earnings before interest, taxes, depreciation, and amortization (EBITDA) by a third. Before asking a supplier to lower your price, do some research into their competitor’s prices (by sourcing quotes from them) and set an internal price target. A procurement service with access to pricing benchmarks can also help you secure the best price possible.

Regular negotiations with your vendors can ensure that you’re getting the best value for your business. Such conversations can also improve your relationship with suppliers, which over time could lead to better service or special terms.

5. Empower your employees to spend responsibly

As a startup scales and hiring ramps up, it’s common to feel hesitation around providing corporate cards to all employees. However, modern corporate cards come with tight controls (on things like merchants, amounts, and categories) that both empower employees and offer real-time spending insights (see #3 above) that the finance team can use right away. Giving all workers a corporate card also eliminates the need for employee reimbursement, a time-consuming and mistake-prone process for both the employee and the finance team.

6. Focus on security

Among small businesses (with less than 500 employees) that experienced a data breach in 2021, the average loss increased 28% year over year to nearly $3 million. That means you can’t afford to not have the best security measures in place. Building your business on a platform, like Microsoft Azure, that offers functionality and enhanced security allows your business to continue functioning without interruption and can give you peace of mind. Azure also offers integration with other apps and suppliers, allowing for single sign-on to those apps from any location.

7. Invest in tools focused on financial wellness

Next-generation financial tools allow you to automate many of the steps outlined above, saving you time and freeing you up to engage in more strategic initiatives to move your company to the next level. Ramp offers integration with Azure as well as real-time reporting, spend management programs, and vendor negotiation. Get in touch today to find out how Ramp can be a long-term partner helping save your company time and money.

About Ramp

Ramp is building the next generation of finance tools—from corporate cards and expense management, to bill payments and accounting integrations—designed to save businesses time and money with every click.

Ramp co-founders - Karim Atiyeh - CTO, Eric Glyman - CEO, Gene Lee - CPO

Thousands of businesses are spending an average of 3.3% less and closing their books 86% faster by switching to Ramp’s finance automation platform. Founded in 2019, Ramp powers the fastest-growing corporate card in America and enables billions of dollars of purchases each year on the heels of nearly 10x year-over-year growth.

For more tips on building and maintaining a financially healthy startup sign up for Microsoft for Startups Founders Hub today.

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7 ways to improve your startup’s financial wellness

A woman in an office environment prepares a presentation folder
Microsoft for Startups, Founders Hub

Open
to anyone with an idea

Microsoft for Startups Founders Hub brings people, knowledge and benefits together to help founders at every stage solve startup challenges. Sign up in minutes with no funding required.

Today’s guest post comes from Emily Jorgens, Head of Business Development & Partnerships at Ramp. Previously, Emily led business development and partnership efforts for Uber’s Driver Loyalty program, Uber Works, and Uber’s international scooter partnerships. Emily holds a B.S degree in Economics and Biology from Duke University.

When launching a business, it’s tempting to spend all your time focused on improving the product or service that you’re bringing to market. But successful founders know that it’s just as important to spend time in the early days building the financial foundation of the organization.

Concentrating on your startup’s financial wellness during its nascent stages can alleviate stress later, and better set your company up for health and longevity. In today’s uncertain economy, the more security you have around your company’s finances, the better your odds of success.

How to improve your startup’s financial wellness

While the best approach to improving your company’s financial wellness may vary based on its industry and business model,  there are several best practices that every startup can implement. Read on for seven steps you can take to improve your startup’s financial wellness immediately.

1. Cut back on wasted spend

If you’re not tracking your spending, it’s easy for expenses to fall through the cracks. Even small, unnecessary expenses like unused subscriptions or duplicate invoice payments can add up over time and become a significant drain on company resources. One way to manage such issues is by implementing clear spending guidelines and a tool for real-time expense management, which allows you to control and approve spending before it occurs.

2. Lengthen your runway

Cash flow challenges are among the top reasons that small businesses fail. By keeping additional cash on hand, you can better equip your startup to make it through today’s current volatile economic conditions. Not sure how much cash you need? Start by calculating your burn rate. While it’s normal for startups to be cash flow negative in the early days, the more you can reduce your burn rate, the more breathing room the company will have to deal with market changes or other challenges. Plus, a lengthier runway can make your company more attractive to potential future investors, providing even more financial security.

3. Utilize real-time reporting

Large companies have the luxury of collecting and analyzing their financial records on a monthly or quarterly basis, but real-time reporting is critical for startups. Dealing with financials in real time makes the process instantaneous and can be transformative for a business. The ability to make decisions quickly—with the most up-to-date information possible—can be a competitive advantage in today’s fast-moving market. By viewing transactions as they happen, you can quickly glean insights that you can use to improve your company’s financial picture, generate spend forecasts, and create month-over-month analyses to plan for costs and identify expense areas that need attention. Plus, by consolidating all of your spend onto one platform, you’ll have the ability to view your total expenses in real time.

4. Negotiate with vendors

A key step in lowering your overall spend is by reducing the amount that you’re paying individual vendors. One recent study found that by cutting supplier costs by 10%, companies could improve their earnings before interest, taxes, depreciation, and amortization (EBITDA) by a third. Before asking a supplier to lower your price, do some research into their competitor’s prices (by sourcing quotes from them) and set an internal price target. A procurement service with access to pricing benchmarks can also help you secure the best price possible.

Regular negotiations with your vendors can ensure that you’re getting the best value for your business. Such conversations can also improve your relationship with suppliers, which over time could lead to better service or special terms.

5. Empower your employees to spend responsibly

As a startup scales and hiring ramps up, it’s common to feel hesitation around providing corporate cards to all employees. However, modern corporate cards come with tight controls (on things like merchants, amounts, and categories) that both empower employees and offer real-time spending insights (see #3 above) that the finance team can use right away. Giving all workers a corporate card also eliminates the need for employee reimbursement, a time-consuming and mistake-prone process for both the employee and the finance team.

6. Focus on security

Among small businesses (with less than 500 employees) that experienced a data breach in 2021, the average loss increased 28% year over year to nearly $3 million. That means you can’t afford to not have the best security measures in place. Building your business on a platform, like Microsoft Azure, that offers functionality and enhanced security allows your business to continue functioning without interruption and can give you peace of mind. Azure also offers integration with other apps and suppliers, allowing for single sign-on to those apps from any location.

7. Invest in tools focused on financial wellness

Next-generation financial tools allow you to automate many of the steps outlined above, saving you time and freeing you up to engage in more strategic initiatives to move your company to the next level. Ramp offers integration with Azure as well as real-time reporting, spend management programs, and vendor negotiation. Get in touch today to find out how Ramp can be a long-term partner helping save your company time and money.

About Ramp

Ramp is building the next generation of finance tools—from corporate cards and expense management, to bill payments and accounting integrations—designed to save businesses time and money with every click.

Ramp co-founders - Karim Atiyeh - CTO, Eric Glyman - CEO, Gene Lee - CPO

Thousands of businesses are spending an average of 3.3% less and closing their books 86% faster by switching to Ramp’s finance automation platform. Founded in 2019, Ramp powers the fastest-growing corporate card in America and enables billions of dollars of purchases each year on the heels of nearly 10x year-over-year growth.

For more tips on building and maintaining a financially healthy startup sign up for Microsoft for Startups Founders Hub today.

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