Page 40 - STJ VOL 3 FINAL_Neat

Financial IQ

EVADING FINANCIAL

CHAOS: The Startup Guide

To Financial Tracking

am the Founder and Executive Director of a startup called The
Housing Hub. The Housing Hub is an online digital market place
I for student accommodation and is the largest in Zimbabwe thus
far. I started the business in 2018 after falling victim to the challenges
associated with searching for off-campus accommodation. It has not
been an easy journey, but the business has since grown from one
listing to over 5000 listings across the country.
Like any business, one key success indicator we look at is revenue and
profit. But, before we get to this, let me start by mentioning a strength
that turned into a weakness which I have noticed is a common trait
amongst young entrepreneurs. We love to work hard! We work too
hard. We can’t stop dreaming about our baby companies; we always
think about them, trying to figure out ways in which we can do better.
What’s the weakness in that you may ask? We forget the essentials.
We fail to focus on our strengths and in the end, we split our efforts
and reach boiling point too quickly. We forget the fundamental
bookkeeping principles.

At inception, I didn’t keep proper finances. I simply didn’t see the need
to unless of course I was asked to pitch the business idea somewhere.
It was only then that I’d see it fit to draw up the books and crack some
numbers. Other than that, it was business as usual.
Trouble first approached The Housing Hub when we realized that there was no book-keeping of accounts in
went to an incubation hub looking for funding. Being my place and we had not been tracking our financial progress
usual self, I didn’t see the need for financials. I simply for over half a year! We had no idea how much had been
just walked in ready to freestyle my way through any expensed – imagine that! We decided to start keeping
questions asked. During the interview, I would try as account and recording every transaction, no matter how
much as I could to avoid the financial questions, but that insignificant anyone would classify it.
didn’t help. One of the ladies on the panel could sense
my defensiveness in the way I answered my questions After three months, we were able to realize where we
and she looked me in the eye and said: “I am not fighting were making the most revenue and we re-directed our
you! Don’t be defensive. I am trying to help you”. I then marketing efforts in that regard. We also managed to pin-
listened to her carefully as she asked me how I had come point our greatest loss-makers and expenses and came
up with the calculations, what the basis was for valuing up with strategies to mitigate them. After minimizing
the company, how much profit we had made and what expenses and increasing revenue, we managed to break-
the future forecasts were because clearly, no investor even in the first quarter of 2019. After breaking even in
would want to put their money where they don’t foresee 2019, our business has been the most profitable it has ever
any returns. been to date and we are now able to trace back exactly
how we achieved this. We can see how the numbers have
As if that was not a hard lesson to learn, I came across helped us in coming up with better strategies to go into
even more trouble when one of my business partners and grow with the market trends.
decided to quit the business and start his own company.
I’m guessing you can already anticipate what went Today, I’m super confident to approach an investor with
down. We both had no idea how much either of us had my business because I have the numbers to back it up.
invested and how much was owed to whom. What I did Bookkeeping is an essential part of entrepreneurship
know was that it wasn’t a 50-50 investment because I and you need to understand where you fork out the most
had visibly invested more into the company. But where money then figure out ways of minimizing it. You need to
was the financial evidence to back me up and prove my understand where and when you make the most money
investments? We argued and fought a lot! I mean, nothing so that you can redirect your efforts towards that area
physical – we kept it classy, respectful and cute. After all and time.
deliberations, the business had to be dissolved and we
had to share everything equally, including the profits that Book-keeping is tedious and daunting! You may not
I had worked so hard for! Now that was my turning point! enjoy it, but it is definitely worth the trouble you may find
It was at this point that I revisited the business model, yourself in if you forego it.
the structures, the team and had a sit-down review. We

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