The Importance of Administrative and Financial Policy in Startups

Jorge Luis Lebrón, CEO of JDL and partner at Boost AC, explores the significance of administrative and financial policies for startups in the Dominican Republic. He highlights how these policies guide strategic decisions and help emerging companies adapt to legislative and economic changes. With tips and strategies, Lebrón advises startups on how they can turn uncertainty into a driver for growth and innovation.

Jorge Luis Lebrón, founder and CEO of JDL, an accounting firm established in 2020 that provides services to companies and local businesses with a special focus on startups, shares his experience in optimizing financial resources through the transfer of administrative and financial knowledge. With three years of experience working with various startups in the Dominican Republic, Lebrón and his team have demonstrated their ability to add value to these emerging businesses.

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From his perspective, administrative and financial policies are crucial for any organization. Administrative policies provide rules that ensure operational efficiency and alignment with corporate objectives, while financial policies establish clear guidelines for managing assets and liabilities. These policies are essential for organizational control and strategic decision-making, acting as a compass that guides the direction of the company by defining its administrative and financial path.

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Lebrón emphasizes the importance of these policies in the early stages of a startup. Without a solid structure, a startup may lack clear direction, which can stagnate its growth and complicate the management of its daily operations. These policies are not only crucial for effective management but are also fundamental for scaling quickly and sustainably.

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Administrative and financial policies also establish a risk management system and define clear boundaries in operations and expenses. This is essential for assessing the financial impact of decisions and ensuring they align with the company's overall objectives. Lebrón highlights that a clear financial and administrative horizon can generate certainty and clarity in decision-making, which facilitates the scalability and growth of the startup.

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When trying to design or establish these policies, Lebrón shares from his experience that several challenges are faced by startups, such as a lack of organizational culture, lack of incentives from the state, and a scarcity of financial and professional resources. According to Lebrón, the solution to these challenges is to integrate into communities of entrepreneurs and to seek guidance from experienced individuals in the field, seasoned professionals, and support organizations within the local ecosystem.

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While startups in the pre-seed or seed stages may still be redefining their vision and mission, Lebrón recommends having at least a basic idea and defined strategic objectives to establish these policies. He also advises seeking expert guidance to draft appropriate policies and implementing them gradually to ensure their effectiveness and compliance with local regulations while monitoring and adjusting these policies. This process not only establishes a solid foundation for internal management but also enhances the startup's credibility with investors and business partners.

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Considering trends and changes in the area of administrative and financial policies, Lebrón anticipates a shift towards greater digitalization and automation in reporting and monitoring for startups in the Dominican Republic, which will need to adapt to stricter regulations in areas such as data protection and cybersecurity. Therefore, he suggests investing in emerging technologies for these purposes, training staff on new platforms, and staying updated on legislative changes that may affect their operations.

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Regarding changes in the economic environment, Lebrón refers to several in the Dominican Republic, such as the rising dollar exchange rate, the approach of a tax reform, and the fact that 2024 is an election year, which generates significant uncertainty in the financial markets. Therefore, startups must have a contingency plan that adjusts to these anticipated changes and those that occur in the market.

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What elements should not be missing from your startup, regardless of the stage it is in:

1. A payment policy detailing when payments are made, who prepares them, and who approves them.
2. Basic organization of accounting records, specifying where and how supporting documents are filed.
3. Organization of accounts receivable and payable.
4. What is the petty cash policy (if necessary)
5. What are the responsibilities towards employees

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In the face of these legislative and economic challenges, implementing solid administrative and financial policies becomes more crucial than ever. Jorge Luis Lebrón emphasizes the importance for startups in the Dominican Republic to adjust their strategies in response to changes, thereby enhancing their resilience and ability to navigate an ever-evolving environment.

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