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According to Inc, one of the most common reasons startups fail is a lack of cash.
This where a chief financial officer (CFO) can really help you by staying on top of your finances, knowing what you need to succeed as well as when it's time to raise some more funds.
Let's look at eight reasons why you need a CFO for your startup.
The definition of a Chief Financial Officer
Some businesses will choose to hire a CFO on staff, while others will decide to outsource this position. Either way, a CFO will perform a number of very essential tasks for your startup.
You can count on your CFO to help guide you as you grow your business. A person with a financial background can take a wide view of your startup and help advise in many areas.
Ultimately, your CFO will help you raise the capital you need to keep moving your business forward. Whether it's taking on debt or seeking out investors, you can count on your CFO as one of this person's main goals is to keep your business fully funded.
While you concentrate on growing your business, introducing products and taking care of the marketing, your CFO can meet with investors, lenders and other key partners. This frees you up and puts someone with great knowledge and experience in charge of your finances.
Now, let's look at the reasons you need a CFO.
A vital role in your startup, a CFO can put in place all of your financing accounting and record keeping software.
Your CFO will make sure you have a budget and stick to it. He or she will manage every level of your revenue and expenses making sure your budget is in line with where it needs to be.
Your CFO can also analyze your finances. This person can look to the future and strategically analyze where you've been, where you are now, and where you are going.
#3: Forecasting and Planning
Since your CFO is in the business of financial and strategic analysis, this person can also help you forecast into the future and make plans based on data as well as the forecast.
#4: Management Reporting
The CFO will develop all of the reporting materials you need for your board meetings. In fact, this person can lead your board meetings in all financial areas from your revenue to expenses and your fundraising goals.
#5: Support for Strategic Initiative
Another goal of the CFO is to improve your profitability. The CFO helps you do this through strategic insight and analysis.
An experienced CFO can help you identify areas where you're spending too much or where a process is inefficient. They can also help you plan initiatives to reduce spending and enhance profitability.
In addition, the CFO can help you identify your startup's key drivers of cash flow such as revenue and working capital, helping you create successful initiatives.
#6: Establish Key Performance Indicators (KPI)
A KPI is what your startup uses to measure your progress and meet your goals.
Your CFO can provide you with reporting to help you manage your business and your KPIs.
#7: Scale your startup
Do you have a plan for scaling your startup? As you grow and bring in more revenue, some things will have to change.
Your CFO can help you grow in a more cost-effective manner and avoid unnecessary growing pains.
#8: Raise capital
Your CFO plays a vital role in helping you raise capital from venture capitalists, angel investors, banks and others.
The fundraising process is complex and can be time consuming for you to handle on your own. Plus, having an expert in your corner is a benefit.
Finally, the CFO adds credibility to your business when seeking capital.
As you continue to grow your startup, you want to add the expertise of a chief financial officer.
Even if you can't afford a full time CFO, or you aren't big enough, you still need a CFO.
The best option is to outsource this position. Having someone to mentor or advise you in all matters pertaining to finances is crucial to the success of your startup.
Are you a new startup ready to succeed? Are you looking to get your new business off the ground and watch it rise to success? We are here for you. We can help answer your questions and guide you through the process. Outsource your CFO and HR duties, finances, payroll and more to us. Contact Escalon today to get started.
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