From Startup to Public Company: How to Scale Finance Operations in Life Sciences

Taking your life sciences company from a scrappy startup to a public powerhouse is no small feat. But as exciting as this journey is, it comes with some serious challenges—especially when it comes to scaling your finance operations. So, how do you make sure your financial systems can keep up as you grow? Let’s break it down.

Starting with the Basics: Building a Scalable Financial Foundation

When you’re just starting out, it’s easy to rely on basic tools like QuickBooks or spreadsheets to manage your finances. But as your company grows and you start thinking about going public, these tools just won’t cut it anymore. You need something that’s built to scale—a financial system that can handle everything from day-to-day operations to the complex reporting required for an IPO.

As Mike Kean, Partner-in-Charge of Sikich’s technology team, said, “Most life sciences firms don’t realize the problem with QuickBooks until a year or two in the industry. By that time, their systems aren’t robust and scalable enough, or they lack the financial reporting capabilities needed to keep up with a growing life science company’s needs.”

This is where an ERP system comes into play. An ERP system integrates all your financial processes into one platform, making it easier to manage everything as you grow. It’s like upgrading from a bicycle to a high-speed train—you’ll get to your destination faster, and with a lot less effort.

The IPO: Getting Your Financial House in Order

When you’re gearing up for an IPO, every detail matters. Investors want to see that your finances are in tip-top shape, and that means having rock-solid financial reporting. This isn’t just about looking good on paper; it’s about proving that your company is ready to play in the big leagues.

To pull this off, you need a financial system that can handle the increased complexity of being a public company. This includes everything from tracking multiple legal entities to ensuring compliance with regulations like Sarbanes-Oxley (SOX). The last thing you want is to be scrambling to get your financials in order when you should be focusing on the IPO itself.

One of the key steps on the road to going public is the 404 audit, which is essentially your ticket to the IPO stage. As Mike Kean puts it, “Before that audit, companies need to have the software and controls in place to build out journal entry approvals, do AP approvals, and other basic steps you can’t do in a QuickBooks or Excel spreadsheet world.”

Technology to the Rescue: Managing Growth with ERP

Scaling your finance operations isn’t just about avoiding pitfalls—it’s about using the right technology to manage your growth. An ERP system like NetSuite is designed to grow with you, whether you’re just starting to scale up or you’re getting ready to go public.

With an ERP system in place, you can automate many of your financial processes, reduce manual workloads, and ensure that your financial data is always accurate and up-to-date. This not only makes it easier to manage your day-to-day operations, but it also gives you confidence that your finances are in order as you prepare for the IPO.

Plus, having an integrated financial system makes it easier to generate the kind of detailed financial reports that investors expect to see. Whether it’s tracking cash flow, managing multiple entities, or ensuring compliance with regulations, an ERP system helps you stay on top of it all.

The Final Stretch: Transitioning from Private to Public

As your life sciences company makes the leap from private to public, your finance operations need to be more streamlined and efficient than ever. This transition can be a challenging time, but with the right systems in place, you can make it smoother.

Remember, going public is about more than just raising money—it’s about proving that your company is built to last. By investing in scalable financial systems early on, you’ll be better prepared for the challenges of being a public company and more likely to succeed in the long run.

So, whether you’re just getting started or already on the path to an IPO, take the time to invest in the right financial systems. It’s one of the best ways to ensure that your life sciences company is ready for whatever the future holds.

Next Step

As you navigate the journey from startup to public company, having the right financial systems in place can make all the difference. If your life sciences organization is ready to take the next step in scaling your finance operations or just need some expert advice, we’re here to listen. Reach out to us at any time and let’s talk about how we can support your growth and achieve your company’s goals.