Although small in size compared to the goliaths in their industry, startups have tremendous advantages over their larger rivals. For example, startups can provide their customers with more personalised service, get a better understanding of their local market, and are also able to react quickly, having only small management teams.
On the other hand, having only a few leaders could also mean that there is limited access to skills and experience vital to a fast-growing business. One area where startups could highly benefit from expert help is in finance.
Often, startups would follow the “old rule” and put off getting a CFO in their team until the business reaches $20M revenue or when preparing for an IPO. However, the role of a CFO in a startup has dramatically evolved. CFOs contribute more to the company than ever before. Today, CFOs go beyond scorekeeping but are more involved in the organisation’s transformation.
By getting a CFO on board sooner rather than later, businesses can establish processes early on in their journey, particularly on governance and compliance – both crucial for a startup’s success. One thing, however, that could hinder budding companies from hiring a CFO is their budget. Hiring a full-time C-suite executive may not be feasible – this is where Virtual CFO (VCFO) services make more sense.
A VCFO provides the same level of expertise as a CFO part-time. They manage the company’s financial activities, oversee cash flow, and provide guidance to the leadership team – all of which are fundamental to the startup’s success.
What is the role of a Virtual CFO to a startup’s success?
Establish Robust Financial Infrastructure
Startups can experience exponential growth overnight. If this happens to your company, do you currently have the financial systems to meet the increased demand? If not, you are at risk of losing momentum and clients.
An experienced VCFO will help startups establish a robust financial infrastructure that is scalable as the business grows. VCFOs also support startups in streamlining their operational processes.
Expand Business Network
A key to building a successful startup is making you and your business known. Networking with individuals in the same or related fields provides your startup with the ability to gain customers and partners.
A VCFO is a highly experienced professional who can effectively build your business’ finances and could also be your brand’s spokesperson. Experienced VCFOs will help you establish investor and client relationships and connect you to key stakeholders.
Provide Funding Guidance/ Secure Funding
In many cases, startups need money through banks, VCs, or other investors to take their business to the next level. Often, securing funding would entail a thorough process, and a VCFO could guide you in this step. Their due diligence management and financial planning expertise can win investors for your startup.
You can rely on your VCFO to guide you in identifying what type of funding is ideal for your business and where you qualify.
Besides having a numbers wiz on your team, Virtual CFOs are also tech-savvy, helping you employ new strategies that will transform your startup’s finance function. VCFOs are adept at integrating cloud-based tools in your processes and utilising cutting-edge automation, data analytics, and AI technologies.
Develop Data-Driven Strategies
Analytics tools and other technologies allow VCFOs to expand their role in startups, such as providing data-driven business advice to the CEO and the leadership team. Virtual CFOs gather and analyse data from tools integrated into your processes, allowing you to understand your customer needs better and giving you a clear picture of the direction of your business.
The first years of a startup journey are critical on whether the company could make it or not. During these times, the startup’s leadership team should develop their offering and generate sales and cash flow. This means the company must have the right people in place. By bringing on a Virtual CFO, new ventures can benefit from having a higher level of expertise to help the startup scale up.
Cloud CFO offers customised VCFO services ideal for fast-growing startups and small businesses. We go beyond compliance and transactional work – we help you plan for the future and achieve your goals. Get in touch with us if you want to know how we can help.