If your startup or business has generated a significant amount of money, it’s time to hire a CFO or the services of a financial firm.
Hire a CFO – What CFOs do
A CFO is primarily involved with the financial side of the business. That includes managing relations with investors, financial projections, rolling cash forecasting, budgets, pricing, debts, mergers and acquisitions, and much more.
They have the greatest control over cash, which is especially important in startups. They keep a check over where it’s used, where it’s going and where it’s at. They direct and manage how the company’s cash should be used – including that which is expected to be raised through future revenue and other resources.
A CFO puts together the key metrics a company should be looking at and managing towards. The information they hold is essential to the running of the business, because of which they also interact heavily with other departments, like sales, and executives.
Raising equity and debt also come under the CFO’s responsibilities. They invite investors and negotiate the best terms for the company.
All in all, a CFO is an executive who along with the CEO is involved in managing all departments in the company towards common strategic goals, using their knowledge and involvement with the company’s finances. A CEO or founder of a company may be equally involved in all aspects of the organization, but they may not have the skills and expertise to help drive a company forward. They may be great at product development, attracting customers or branding the product, but creating policies and internal planning is much more complex, and CFO’s generally do a better job at it.
Hire a CFO – How a CFO drives startup growth
Because of their extensive knowledge, CFO’s are relied upon to watch over in many companies, particularly for accounting and financial processes. However, they are used more as a watchdog in startups as founders feel that they do not need them for growing the company. A good CFO can do much more than watching.
They are better able to understand current market opportunities. They ask the right questions to make sure that the other executives are thinking about things from a strategic standpoint as well as a tactical point of view.
A lot of the time, especially in startups, executives spend more time focusing on day-to-day operations. In the midst of routine drama, they have little time to plan for the long-term. A CFO can think of possible futures for the company, and what the company needs to be doing today to reach their long-term goals.
A company goes through many new ideas in an effort to grow and increase revenue and productivity. They are only considered successful after the CFO has assessed them. The financial executive goes back and compares results from both before and after the campaign. If the program isn’t delivering results as expected, they analyse and find out what went wrong, and determine whether or not it’s worth the company’s resources to continue. Using numbers and figures they make informed decisions to help the company succeed.
Hire a CFO – When to engage with a CFO?
If your startup or business has generated a significant amount of money, it’s time to hire a CFO or the services of a financial firm. At this point, the financial arm of your company has many things going on at the same time which need attention. Contracts you may have signed, accounting, revenue recognition, projections, and budgeting are just some of the things that need individual attention. A professional financial person will not only manage it but also give valuable insight into your company based on the numbers.
Institutional investors – venture capitalists – have certain expectations on financial reporting, plans and transactions. If you are dealing with institutional investors, it would be smart to hire a CFO to deliver answers to their questions. First-time CEO’s are not usually aware of the rigorous standards expected and need a professional to handle their finances.
A lot of complexity and activity in a company brings greater risks with it. If processes and outcomes aren’t reported correctly, something can fall through the cracks and hurt the business. As a CEO, the one thing you need to have for external stakeholders is accurate financial reports. Accounting daily expenditures, updating forecasts, managing equity and debt are some of the most important things that need to be attended to, and no better person to do that than a CFO.
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