The part-time CFO carries out various activities that need knowledge in accounts, working strategies, and financial modeling. Normally, he/she performs duties that present workers are not able to do. Whether you are offering mobile casino services, banking services, teaching services, or any other service, hiring a CFO can make your startup grow. Here we talk about a fractional CFO and its benefits for a startup.
What a startup can gain from a fractional CFO
The things you should check before hiring a CFO include:
- The ability to forecast, model, and analyze: Look beyond their certification and experience related to their duty. The right CFO is the one who is excellent in predicting, planning, financial modeling, and analyzing returns.
- Strategic idea and judgment: He/she must be futuristic and capable of thinking strategically.
- Mitigation and risk analysis knowledge: During the best day for a startup, it will be turbulent, often flying in destabilizing forces and more. When such a situation occurs, a CFO’s duty will be to assess and manage the risks.
- Judgment balance and a powerful moral compass: The best CFO for any startup must possess strong startup growth strategy orientation, a clear understanding that generates profits, and should additionally be a great narrator with figures and analysis. The startup may need these qualities during investor reporting and fundraising.
- Be able to create and control an agile infrastructure: An almost-final power of startup CFOs builds lean money companies from zero. This is mostly from the dynamic and quick-evolving ground.
- Functional and intellectual dexterity: CFOs must be all-rounded, capable of performing many roles in a startup.
What new companies gain from CFOs?
Most financial and accounts employees work with the previous and current money transactions. Part-time CFO may be asked to predict the future of the startup from a financial point of view. He/she will also offer strategic suggestions for the startup to grow.
Fractional CFOs normally help companies to determine the right methods of attaining the results they want to achieve. That normally requires analyzing financial objectives during the coming years and making suggestions on how to finance the startup. Financing can be done through a loan or an outside investment.
Enhancing the flow of funds
Knowing how funds move in the startup is a major consideration for business owners and people who are investing in it. A part-time CFO can help by enhancing the analytical power of the startup information. He/she will then form a plan of how things will be done as per the analysis.
Good CFOs are even able to determine where is a leak. That can enable them lower leakages and come up with creative methods of enhancing the money flow as per the goal of the startup.
Most startups hate searching for methods of cutting costs. But operating a startup in a lean fashion is necessary because there is little support. A part-time CFO can make that a better process by checking the cash that comes in and the one that goes out. After knowing that, he/she can determine how to minimize the costs to make the startup more profitable.
It may be simple for fractional CFOs to make the necessary suggestions because it will be easier to act properly than the in-house CFO.
Analysis of business acquisition
Choosing to get a business may be risky but profitable too. The main factor is to value the business to scale in a proper manner. Planning properly is the perfect way to do things the right way and part-time CFOs are good at that.
The highly experienced ones can be able to determine how extensive startup finances are analyzed. They will also be able to review the markets for similar businesses to get a good valuation. Next, they can determine how to finance the acquisition via equity or debt.
The strategy for growth
Many individuals assume that growth is the duty of the startup founders, the salesperson, or the startup advertiser. But the fractional CFOs are capable of offering crucial input for the strategy of growth. The modern ones may use client acquisition cost analysis and client lifetime worth analysis to calculate metrics.
The best example is determining the return on investment in advertising costs and the next search for lowering costs of getting clients. By utilizing data analysis to inform them, CFOs are at the center of the business strategy.
They are capable of forecasting near-term money performance and involve marketers to assist in improving practices.
They can bring so many benefits to a startup that wants to grow its business, minimize the costs, or get their accounting and future predictions. Full-time CFOs might not be afforded by startups who are still building their brand. But the fractional ones can bring great value to a startup that is growing.
Choosing to hire a CFO is a decision that should be made by the owner of a business startup and the board. And hiring one shows that the company wants startups benefits like having detailed and a more specialized level of managing, organizing, and executing activities. Are you running a startup? What are you doing to ensure that the CFO you hire can perform all the roles we have talked about here? Write to us and in case you have a question, just ask.
Our guest Contributor
This article was prepared by a business writer Thomas Glare who loves advising people on how to grow their new businesses. His articles have benefited many people, especially the youths, who are new to the business field. Besides writing, he also loves reading, traveling, play games, and making new friends.