Why Financial Services Are Vital to Tech Companies 

It would be easy for some observers to dismiss the UK tech sector as a mere poor relation to its colossal United States counterpart that brought us such household-name titans as Google, Microsoft and Apple. 

However, recent statistics suggest that this would do a severe disservice to the scale and sophistication of the current UK tech industry which saw stellar growth between 2010 and 2020. Investment in the UK’s tech sector in that time went up from £1.2 billion to £11.3 billion, comparing well to the situation in nearby economies such as France, Germany and Sweden. 

Such growth figures indicate that the UK has increasingly become a haven for lucrative tech companies, with many of them moving from start-up status to scale-ups. But regardless of the development stage your own tech company may have reached, you will still require suitably tailored financial services – and here is why:

 

You don’t necessarily need deep pockets to start a technology business  

Many people naturally presume that one would require major resources in order to start a tech company, but this isn’t necessarily the case. There are many stories of successful tech firms that managed to launch despite the founders having almost no money. It is highly advisable, however, if you are only just looking to start out as a tech company, to have some kind of technical background yourself, or to partner with someone who does. 

One might assume that money would be needed in order to build the given tech company’s product – but again, this is not always the case. In the case of software tech companies, for instance, an entrepreneur may conceivably write their own code and put in place the foundations of their new tech business at no or little cost to them, other than their own time and that of their partner. 

 

 

So, where do financial services come in useful for tech firms? 

One obvious moment when tech company founders are likely to turn to financial services providers, is when the time comes for them to look into funding options. And of course, financing solutions like small business grants, venture capital, business angels, invoice finance and bank business loans have long helped make the difference between the success and failure of fledgling tech companies.

But it is also true that the right financial services are likely to prove much more than a mere ‘add-on’ for your tech business. 

From the very first moment of starting your tech business, for example, you will need to put together an effective business plan, for which the input of experienced business plan consultants will be invaluable. And that business plan, in turn, will aid you in drawing up a realistic budget, encompassing forecasts for sales, expenditure and your monthly cash position, to help ensure your new tech business does not fail when it has only just begun. 

 

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The running of tech companies presents significant challenges as they grow

For even deeper insight into the breadth of financial services that can help power your tech business to longer-term success, it is well worth reaching out to our advisors at Practical CFO. 

After all, as your tech firm grows, further key financial decisions will need to be made, on such matters as the development of your product, marketing the product, and recruiting staff. There are many finer points of your tech firm’s financial health and growth strategy that will need to be considered – which you might not have a great amount of time for, as the founder. 

This is where you are likely to find the services of a finance director, or FD, indispensable even at an early stage of your business’s growth. It is this person who will be able to peer ‘under the bonnet’ of your tech business, and devise and implement the strategies that will help your firm to manage its cash flow, costs and expenditure – and in the process, minimise risk. 

A finance director isn’t someone your business should only be taking on once your firm has reached a certain level of growth. That’s because they can play a central role in getting your business to that stage to begin with, such as by assisting you with the formation of your business plan, and putting you in touch with potential funders and business angels. 

 

How can we help relieve some of your burden as an entrepreneur? 

Are you concerned about the resources that would be taken up by an in-house FD or accounts department, when your tech business is only just getting started? If so, there’s no need to go that far, at least at first. 

If you are looking for financial services for tech companies , you can find out more at Practical CFO include outsourced FD services. Such solutions would enable you to benefit from a high level of knowhow and experience in a cost-effective out-of-house team.