Chief financial officers are typically associated with big business. Yet, as the corporate structure has been challenged with the introduction of bottom up companies and startups thriving in the digital age, an increasing number of small companies are making use of more traditional business practices to enhance their business models.
While startups pride themselves on being flexible and thinking outside of conventional business models, it’s safe to say that businesses of all types are seeing the benefits of redefining what success means, thus also redefining traditional roles.
Startups today can greatly benefit from the expertise of a chief financial officer, so it’s vital that you know when if and when you are ready to take on a CFO.
You are steadily building a loyal customer base
There is a certain amount of preparation that needs to go into your business plan before you bring in a CFO to help you sort out your finances. This means keeping track of your growth, and not just financially. Monitoring your consumer base allows you to identify what your customers expect from you as a company and what marketing tactics are most effective when it comes to attracting and retaining customers.
As your startup generates more interest, a CFO can help you develop effective strategies based on attracting consumers based on your current growth activity. Budgets that consider consumer needs, will help you make smarter investments in marketing and also understand where improvements need to be made in order to encourage customers to stick around.
Investors are showing interest
For many startups, investors showing interest is a marker of success. While this is certainly exciting, there are more than enough examples out there today that prove you shouldn’t jump at the first offer, even if it seems perfect. In this period of growth, a chief financial officer’s skills can really shine.
The majority of chief financial officers skill sets are focused on controllership skills, managing and analysis finances based on past financial records, in addition to keeping a close watch on capital structure. When approached by investors a CFO can help you decide if your startup would indeed benefit from an investment and on what terms and conditions you are willing to agree to. Before making any decisions, a CFO will also help you establish a strategic outline that will illustrate what will be done with the funding and how it would benefit your startups. Not just good for your own plans, but preparing a financial plan also helps you establish clear communication with potential investors in the future.
Explore your need with an interim CFO
If your startup is indeed experiencing steady growth and had attracted the attention of partner and investors, bringing in a chief financial officer is practical step to take in order to set up a strategic plan that will help you set up a successful future. Of course, it’s startups that are experiencing growth doesn't always have the budget or ability to take on a CFO on a full-time basis.
Hiring an interim CFO is an excellent way to reap the benefits of working with a financial expert without making a full-time commitment. An interim CFO will help you see how your startups can benefit from financial expertise and create milestones based on what you expect to gain from your relationship with a CFO.
There’s little doubt that the alliance between growing startups and a chief financial officer can be hugely beneficial for a growing company, it is imperative that you are prepared to undergo some serious transformations. While these changes are in a startup’s best interest, it can only be a positive working relationship if your company has reached a point where they are prepared to let go of their bootstraps and step into their big business shoes.
Michael Volkmann is an entrepreneur with a focus on business operations and finance. He has worked with many small businesses helping them with their M&A for over 6 years. You may sometimes catch him on Twitter.
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