If you’re a first-time founder, navigating your startup’s financial operations can be daunting.It's easy to get caught up in the excitement of building your product, and forget to keep a close eye on your expenses. In this post, I'll share some of the lessons I've learned about creating a lean financial operating system for your startup — including establishing benchmarks, working with a bookkeeper and hiring strategically. As the founder of MadMen AI, I've learned a lot about running lean startups, and we’ve learned from our mistakes! You can check out parts one and two of my series on this topic.Why you should watch your expenses closelyOne of the biggest challenges of running a lean startup is finding the time to conduct thorough reviews of your expenses on a regular basis. When you're juggling a million different tasks and responsibilities, it can be tempting to put financial oversight on the back burner. But neglecting to keep a tight rein on your spending can lead to issues down the road.It's not always feasible to do a deep dive into your expenses every single week, especially if you're running on a small team with limited resources. However, it's important to establish a regular cadence for reviewing your spending, whether that's bi-weekly, monthly or quarterly.Why is this so critical? For one, it helps you identify areas where you might be overspending or allocating resources inefficiently. Catch these issues early, so you can course-correct and make sure every dollar is working hard for your business.Keeping a close eye on your expenses also helps you maintain a lean and agile approach to building your startup. When you have a clear picture of where your money is going, you can make informed decisions about where to invest and where to cut back. This is especially important in the early stages of your business when every penny counts.Of course, conducting regular financial reviews is easier said than done. It requires discipline, attention to detail and a willingness to confront hard truths about your spending habits. But the payoff is worth the effort.The 3-step process for creating your lean startup financial operating systemStep 1: Find your benchmarkYou don’t have to go into financial management cold — look for benchmarks! Find out what finances and expenses look like for startups similar to yours. Seek guidance from resources like accelerators and incubators, and tap into your network of mentors, investors or fellow founders who have experience with startups in your niche.These benchmarks will help you identify areas of overspending and make informed decisions about investments. Remember that benchmarks are just a starting point and will evolve as your startup grows, but they provide a foundation for creating a lean and effective financial operating system.Don't hesitate to reach out to your network for guidance – many people are willing to share their insights and experiences to help you navigate the early stages of building your business.Step 2: Go beyond basic bookkeepingBookkeeping services might be helpful for you, but make sure you’re getting the financial information you need to run your startup. For example, many bookkeepers don’t provide accurate burn rate reports — especially if you're working with manual bookkeepers who only review your finances once a month. No matter who you’re working with, get your burn rate so you understand your runway each week.To gain a better understanding of your expenses, use providers that aggregate and categorize your expenses and provide deeper insights into trends. Zeni is AI-powered bookkeeping software that does a good job of this, and Pilot has a good reputation as a back-office accounting provider that gives you these critical reports—but no matter who does your bookkeeping, ask for the reports you need to deeply understand your finances.Establish a consistent process for reviewing your numbers with your co-founder. Then, prioritize your biggest expenses and communicate your numbers (including your burn rate) back to your team.Step 3: Build your “source of truth” systemCreate a single source of truth for your finances, instead of having accounts and reports spread out in multiple places. One source of truth can give you a clear understanding of how much capital you have and where it's located, and also where your money is getting blocked.Use a bottoms-up approach to calculate how much money you need, and look at the delta between that and your actual spending.Set goals for where you want to be financially and regularly review and revise them. Monitor your runway by dividing your current funds by your burn rate. This will help you identify any discrepancies between your expected and actual expenses, so you can make informed decisions about your startup's financial health.3 pro tips for lean hiringSalaries tend to be the biggest expense for early-stage startups, so it's crucial to be strategic about your hiring decisions. Here are some pro tips for lean hiring: Look at your finances and determine how many people you can afford to hire. Prioritize filling seats with engineering talent first, taking into account the technical prowess of the founders. Consider investing in product design next, if it's a key differentiator for your customers. When it comes to sales and marketing hires, the right approach depends on your go-to-market (GTM) motion. As soon as your product moves from alpha to beta, bring on a business person to help figure out GTM and distribution. A skilled person in this role can significantly accelerate your ability to learn and iterate quickly. This frees you up as the founder to focus on product development. Remember, the goal is to be strategic and lean in your hiring decisions, and ensure that each new team member contributes to your startup's growth and success. You can build a solid team that works well together and helps you reach your goals, but still be mindful of your resources.