When you start your own business, particularly your first, you go on a very steep learning curve. Armed with your product, service and enthusiasm, you take the plunge and become an entrepreneur.
With hard work, perseverance and the ability to learn from mistakes, you reach a position where a start up becomes an established small business.
Your first experience with an accountant has likely been in preparing your year-end accounts and ensuring the correct amount of tax has been paid.
As a business continues to grow, it starts to scale-up and that is when the real pressures begin.
Up to this point, it will have been possible for the founder to be able to handle the strategic direction of the business themselves.
But with growth comes an increasing level of sophistication in business activity, which is originally handled through the creation of an effective internal management team.
And with growth, the financial management of the business becomes ever more complex.
As an ambitious business founder, you are looking ahead, and funding becomes increasingly important. Whether that is through grant funding, bank loans or perhaps you have decided on equity funding.
You are entering a World of funding rounds and venture capital which is a million miles from where you were when you started.
Your expertise lies in other areas, but you know it is vital to have the expertise to manage your growth on a proper financial footing.
The time has come to decide.
Do I need a CFO?
The Chief Finance Officer (CFO) is the latest incarnation of the previously known Finance Director, the ‘grey eminence’ on the Board of any successful company. The thought of enlisting the services of a CFO probably fills you with a certain unease.
Consider for a moment the perceived image of a CFO. A thoroughbred of finance, such expertise and experience, however necessary, will not come cheap.
Above all, there is the worry any responsible founder would fret over, can they be trusted?
Yet without the expertise such a person can provide, how are you going to be able to achieve your vision for your business and get it to the scale you want it to be?
A commercially minded and switched on CFO can add huge value to your growing business. providing tactical and strategic advice to help across a wide range of financial areas. This includes cash flow, budgeting, tracking financial performance and providing visibility over the levers you can pull in your business to improve profitability, all of which lead to the improvement of shareholder value.
In early-stage and investment backed business, the role of a CFO is critical, helping to manage the standard financial activities and giving your investors confidence in your numbers and your cash runway.
But most importantly, a CFO in your early stage business will roll up their sleeves and get the work done, possibly managing multiple business functions such as HR, IT and risk management. This frees up your time as founder to focus on what you are good at: building your business.
Many business founders assume their year-end accountant will give them the advice and support they will need to grow. This is not, of course always the case. Many traditional accountants don’t have the capability to deliver on these services, largely because they are focused on servicing your year-end accounts and tax requirements.
They will tell you what you can or cannot claim. They will help you with structuring so that you have your assets protected. They will ensure you remain compliant with HMRC and Companies House.
This is not to denigrate their role; compliance is of course vital. But there is a huge difference between a commercial minded financial manager/CFO and a traditional accountant. They are both accountants, but your traditional accountant’s focus is making sure you tick all the boxes with your year-end accounts and tax. The financial manager’s focus is about driving financial performance. These are completely different functions and capabilities.
The dilemma is that whilst all businesses can get value from the capability of what a financial manager and CFO can provide — they come at a cost.
The dilemma is this — does the value a CFO create outweigh the cost? It is a difficult dilemma to wrestle with.
However, it does not have to be an ‘either-or’ scenario as to whether you do or do not enlist the services of a CFO. A solution perfectly tailored to the needs of businesses that are just on the cusp of becoming fully fledged small businesses from their start up origins.
The On-demand CFO
If you do not feel ready to take the plunge and appoint your own CFO, the answer lies in enlisting the services of a virtual finance team. The expertise of a CFO on hand whenever it is needed. Short term within your business as required, or on a consultative basis whenever strategic financial advice is needed.
We can help you in this stage of your growth journey. We specialise in businesses that are at the ‘in-between’ stage in their growth from start-up through each stages of growth as you scale-up. We are there for you until you need a full-time CFO. We build long-term collaborations based on mutual respect and trust.
We build bespoke digital finance systems and controls, giving you a robust platform to scale.
Our management information is tailored to you and built with the user in mind, whether that be the Board or the leadership team.
Our dedicated FD service can be weekly or monthly. We are primarily virtual but working with you as part of the wider team. We are here to help.
We build our delivery around you. We can support you with:
Dashboard reporting of your financial and non-financial key metrics
Budgets and forecasts
Rolling revenue and financial re-forecasts
Cash burn monitoring and runway planning
Advice and support on business strategy and funding
Virtual attendance at board meetings
We take the time to develop a full understanding of your business and the vision that inspired it, and work with you to help achieve your ambitions for it.
If your business has reached the stage where an on-demand CFO would help you get to the next stage, we would be pleased to discuss your requirements and help you make it happen.
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