In the early phases of a startup, management control often gets put on hold. Between incorporation, filings and bureaucracy, the goal is to close everything quickly and concentrate on product and go-to-market. The thinking is that the big costs are now behind you and the numbers can wait. In reality it is precisely at the beginning that many expenses switch on, software, services, consultancies, often without anyone noticing.
Starting immediately means setting up financial governance by centralising decisions, avoiding redundancies and truly understanding how much the resources we are deploying cost.
What management control is (in simple words)
Management control is often perceived as one more bureaucratic step. In reality it is anything but: it is an operational tool.
Just consider that, when you rely on an external consultant for accounting, this rarely includes management control: the numbers get recorded, and only at year end do you get a photograph of the company. For a startup, that is an enormous risk.
Accounting is fundamental (and mandatory), but it only tells what has already happened: invoices received, costs incurred and so on. Management control starts precisely from that data, reorganises it and turns it into information useful for understanding how the company is doing and where it is going.
That is why the two things are tightly connected: without up-to-date accounting there is no good management control, but without management control, accounting remains a mere administrative exercise. In my experience, having both in-house, from the very start, gives you a completely different level of control and awareness.
Why in startups it is an “unknown”
Once the company is incorporated, attention immediately goes to fundraising, development and sales. Understandably: the product comes first. But this often leads to postponing the moment when you truly stop and look at the numbers.
Added to this is the lack of time and dedicated skills: management control is not just looking at data, it is knowing how to interpret it. And many founders think complex software or big budgets are needed to start.
In reality you can start in a very simple way. In our startup studio, for example, management control lives in an Excel file built and improved over time: inside there are budget, actuals and cash flow talking to each other. We built a system of tags and sub-tags (similar to a chart of accounts) that is identical across all views: budget, actuals and cash flow. This lets us compare historical and forward-looking data coherently and immediately understand where costs and revenues concentrate and what impact they have on the cash.
The goal is not to eliminate “gut feeling” decisions entirely (those are part of the game), but to reduce them to a minimum and, above all, to understand their effects. Because without structured numbers, the risk is steering the company somewhat blindly.
When a startup should start doing management control
Ideally, management control should start right away, almost in parallel with the incorporation of the company. Already at the business plan stage, precisely to ease and speed up the analyses to come, we try to structure costs and revenues using the same tags that will later feed the management control file. Obviously, compared to the business plan, management control is far more detailed and analytical. The BP is a macro forecast; management control is a continuous analytical system.
In practice, though, not everything is immediate: in the first months, the main fixed costs are already forecast in the business plan and often do not change much. That is why, in our companies, management control really gets going from the second or third month, when the first post-incorporation operating expenses begin: consultancy contracts, new software, first hires.
From that moment on we track everything: revenues, costs, staff and also capital inflows, such as capital increases, grants and tax credits. It is precisely in this phase that choices start having a concrete impact on the company’s financial sustainability.
What to actually control in an early-stage startup
In the very first phases, fixed costs are usually fairly clear: they have already been estimated in the business plan and rarely change much in the first months. The real game is played on variable costs.
That is why it is fundamental to always have both a budget view and an actuals view: only by comparing the two do you truly understand where the differences lie and, above all, where to intervene. Without this comparison, the numbers remain abstract.
Another central point is cash flow. Monitoring the cash means keeping runway and monthly burn rate under control too. With monthly updates we manage to catch every variation of these metrics immediately and adapt operational choices accordingly.
Margins and revenues by channel or product may come a little later, but as soon as they are available they must be tracked: even if the data is not perfect, it is fundamental for understanding what is really working.
The most common mistakes
The biggest problem is not so much lacking the data, but not knowing how to read the management control you are doing. The numbers are there, but they must be interpreted correctly: it takes skill to understand what they are really saying and where they are taking the company.
It happens, for example, that you see a six-month runway and don’t worry, because you are confident in future revenues or in cost reductions that are not yet structured. At that moment you are no longer deciding on the basis of numbers, but of feelings. And that is exactly the biggest risk.
Management control serves precisely to avoid this: turning data into concrete actions, before it is too late.
Conclusion
In the end, the true value of management control is not the control itself, but the clarity. Clarity on where the money is going, on how much time you have ahead of you and on which decisions are really working.
You don’t need to start with complex tools or perfect processes. You need to start. Even with a simple Excel, a few key numbers and a fixed moment of review with the team. What matters is building a habit from the start: looking at the data, interpreting it and using it to make decisions.
Because in startups, uncertainty is part of the game. But navigating without numbers is just unnecessary risk.
Startup Bakery is the Italian startup studio specialised in creating B2B SaaS companies with Artificial Intelligence. We offer aspiring Co-Founders the opportunity to develop a business idea. We create investment opportunities for Professional Investors*. We help* companies in their innovation process.