All startups are the product of ingenuity, gumption and a dream – but you can’t make a dream into reality without a solid foundation.
It is a sobering fact that 90% of all startups fail, and financial missteps are some of the biggest culprits. The key financial responsibilities of a startup such as minimizing overhead, tracking and monitoring spending, making smart investments and managing cash reserves may not fall into your wheelhouse of expertise.
A savvy startup looking to grow rapidly needs more than basic bookkeeping and tax advice – they need strategic financial guidance from a seasoned financial professional.
Enter the CFO Consultant; a part-time experienced financial officer, full-time financial wizard. They are brought into startups like yours to provide financial services, strategic insight and forecasting to help your business not only survive, but thrive. They take care of the financial backend so that you can focus on what you do best – creating value for your customers and clients.
This profession arose to respond to the needs of entrepreneurs like you – small businesses that need expert financial guidance without having to pay a full-time salary. In an agile environment where you are actively testing concepts and pivoting on a dime, you need someone in your corner who knows how to roll with the punches when your company changes directions in 6-months.
Stats Show That Startups Who Don’t Bring on Experienced Staff Are More Likely to Struggle
Executive-level problems require executive-level solutions, and the earlier on in your life cycle you acquire this expertise, the better.
So many startups fail that there is an entire website called Failory that provides lessons learned and interviews from failed startup founders (the founders themselves also failed in their previous enterprise). They recently conducted a survey with failed startup founders, and uncovered these common characteristics:
Poor planning: Emotional pricing, non-payment of taxes and lack of concrete direction.
Lack of experience in line of goods: Buying the wrong inventory, lack of knowledge of providers, wasted advertising budget etc.
Inexperienced officers: The lack of experience in CEOs and Directors of a startup led to missteps, often relating to scaling poorly or hiring inefficiently.
Below you can see a visual representation of how many respondents cited a specific reason for the collapse of their startup:
One of the common characteristics of all successful startups is a solid financial scaffold. If you need guidance related to the financial angle of your business model, checks and balances, cash flow, or management of funds – it helps to have a part-time CFO in your corner. Financial advice can come from many places, but there is truly no one more qualified than a CFO with a strong track record managing the financial health of businesses in your industry.
Benefits That Outsourced CFO Services Can Provide Your Startup
Just like the employees of any startup, CFO consultants are comfortable wearing many hats, and adjust their function to provide your business with the right services at the right time.
Here are some of the many ways that an interim CFO can benefit your business:
Financial Planning and Forecasting
At their core, a CFO will oversee the financial and accounting functions for your company. They will help develop internal accounting controls, provide regular financial reporting and guidance, and make sure there are proper checks and balances in all accounting matters.
Companies whose business models are dynamic benefit most from financial forecasting. CFOs will develop rolling forecast tables that project up to 12-months out so that you can allocate resources to meet your goals.
Designing and Implementing Accounting and Reporting Systems
Financial data collection and interpretation are key to the success of your business. A CFO will help you implement streamlined accounting, inventory tracking and invoicing systems designed to help you scale your business. Proper reporting systems are key to adapt your financial metrics into an easily interpreted format for both internal and external stakeholders.
Cash Flow Management
Cash flow statements that incorporate net income, long term assets, stockholder equity, and liabilities. Through regular evaluation of cash flow, they also help incorporate cash improvement programs.
A CFO will also put together presentations and attend business meetings to aid in the acquisition of more funds from investors and lenders.
Seasoned, Strategic Insight
Bringing in an outside perspective often helps reveal new paths forward you would not have otherwise realized. A CFO who has worked with hundreds of clients will be able to help you identify new strategic goals and initiatives.
GCG Helped Gemini Mobile Technologies Expand Rapidly Overseas
When Gemini Mobile Technologies (now Cloudian Inc.) was a young but growing business expanding into international markets, they required a complete overhaul of their financial systems, controls, and policies. GCG partnered with them, and our interim CFO helped them:
Specify and manage the implementation of a robust ERP system that could accommodate Gemini’s international operations
Manage the development of a multi-country internal finance and control staff
Install annual budgeting and periodic forecasting processes
Bring revenue recognition policies and procedures in compliance with GAAP
Develop a project cost accounting system
Plan and manage its initial and subsequent annual audits
Support several major financings
Assist management in restructuring operations as business and market conditions required
“GCG’s executives don’t work like typical consultants; they integrate themselves into the company like they’re part of it. They’re deeply engaged in our business, take full responsibility, and we trust them completely.” – Michael Tso, Chief Operating Officer and Co-Founder of Gemini.
Contact GCG for a free consultation
Our CFO leadership team has extensive knowledge of the financial considerations of several industries, and have provided value to early stage startups and Fortune 500 companies alike. Our consultants and Virtual CFOs have the ability to implement all the systems and procedures you need for a solid financial future so you can concentrate on growing your business.
Contact us for a free consultation and we’ll outline how our services can help your startup reach the next plateau of success.