UBICO Blog

Indonesia is the most populous country in Southeast Asia. So it’s no wonder the internet users are the highest in the Southeast Asia region. Therefore, the potential for digital economic growth is also high.

Due to these conditions, the development of digital business models is also very diverse and rapid. One of them is a startup. It is called that because the company is newbie, bringing a millennial and digitalized solution. For example Gojek, Tokopedia, Bukalapak and many others. Even until 2019, there were around 2000 startups operating in Indonesia. This number is the fifth largest in the world.

Seeing these developments, it is certainly interesting to build a startup. Of course there must be things that need to be focused on. One of them is the financial sector, because of its crucial position, as the blood of business. In order to build a startup that is able to survive, develop and then expand, in the financial sector, it is necessary to focus on three things, as follows.

1. Revenue

Any company, including startups, needs revenue to maintain its business continuity. Without income there is no price for a job. So startup companies must focus on getting revenue. That’s doing by advertisements, offers or promos, which means introducing a product that provides a solution to a problem. From these introductions, the income will be received.

However, having income is not enough. Because it could be that the income is only break event point. Then what needs to be done?

2. Profit

The answer is to dig for profit. From this advantage the company can continue to operate, so that it survives, grows and then expands. Without profit, the company cannot do everything. The operation continues, but it will experience a setback over time, and then bankruptcy. Even non-profit organizations need grants to continue to maintain their operations. This means that the need for profit is absolute.

However, there is a company that is able to record high profits. Unfortunately the company has also stalled its operations. How can this be?

3. Cash Conversion

Companies that record high profits, but conversion to cash is low, of course, cannot be said to be in a good state. Therefore the cash conversion is very important. Moreover, startup companies whose daily transactions are quite high. If you are not careful, then the receivables can be quite a lot. Furthermore, it will have the effect of obtaining high profits. If it is not converted immediately, it is not impossible that the receivables will become uncollectible. If so, profit is only an illusion. So it is important to pay attention to the conversion rate of the cash. Because the company’s operating costs are in cash.

These three points should be the focus of startup companies. Even when they were just established, the three of them must be considered. Because finance is the life of every business. Like blood in humans. Financial stagnation, it could be a stroke of business.

So is you want no stroke in the startup business, focus on building all three. You don’t have to do it yourself, because you can work with financial and accounting consulting firms.