When you launch a startup, chances are strong that you don’t immediately bring on a chief financial officer (CFO). That’s because most entrepreneurs believe that a CFO is only for giant mega-companies and that they aren’t necessary until you plan to go public. However, nothing could be further from the truth. In reality, your startup can grow more quickly if you have someone on board who can map out a plan to help you reach your financial goals, and you don’t need to hire someone full-time to get these benefits. An outsourced CFO can provide you with all of these advantages while also ensuring you don’t have to bring someone on full time.
Outsourced CFOs can help startups create forecasts, project income and plan out future progress. They can run the entire finance department of a company if you’d like, or they can handle specific aspects if you prefer. Check out a few benefits of outsourcing CFO services at your startup.
Analyze Your Reports
The more data-driven your startup is, the more likely it is that you will foresee opportunities and anticipate errors in advance. A CFO can review a company’s data to determine its operational efficiency. They can use that data to help you drive business growth and improve productivity. Startups need CFOs’ guidance, particularly if they’re getting investors, and they need someone to analyze the data to make operational improvements.
Hiring a full-time CFO typically comes at a very high price. Therefore, outsourcing CFO services can be a financially viable option for startups looking for expert guidance. An outsourced CFO can provide you with in-depth financial analysis and reporting, such as a cost-benefit analysis and a profitability analysis. A CFO Services firm can also interpret your financial data regularly and help you identify your company’s key metrics so you’ll be able to determine a reporting schedule for ongoing monitoring.
Create Strong Relationships
A CFO is a highly experienced professional who can not only effectively manage your business’ finances but can also be the financial spokesperson of your company. CFOs can build new investor and customer relationships, establish core financial processes and reporting requirements, and create a path to growth for your startup.
Outsourcing CFO Services can ease the process of interactions with external investors, bankers, board members and other stakeholders. Further, you can also benefit from the outsourced CFO’s network, as well as gaining a vast knowledge of their best practices across sectors.
Manage Fundraising Processes
Taking too long to outsource CFO services will not leave you enough time to understand your business before fundraising or IPO (initial public offering) activity begins. A CFO who has good relationships with investors can play a vital role in raising funds for your business. They are involved in preparing and pitching financial projections to potential investors and convincing them of the reliability of these projections. That means if you are expanding into new geographies, products or services, your CFO can help you establish new connections.
Planning Your Financial Future
When a startup decides to go public or to merge with another firm, the CFO can develop and implement strategies to deal with rough financial periods and sudden growth to ensure a smooth transition. An outsourced CFO can help a startup perform the following financial planning functions:
● Finding methods to obtain startup funding
● Setting company goals
● Conducting market research and analysis
● Drafting a sales and marketing plan
● Setting up an accounting and financial management system
Scale Your Business
When you're ready to scale your business and you aren’t in a position to hire a full-time chief financial officer to forge the path, outsourcing CFO services can help you take the right steps that will lead you to growth. They can help you scale your business by:
● Ensuring your financial infrastructure is ready
● Building the most cost-efficient tax structure
● Helping obtain financing or raising funds
● Performing financial projections and risk assessment
By bringing an outsourced CFO on board, you’ll be in excellent hands and positioned for strong growth so your company can thrive now and in the future.