Benefits of a Consulting CFO
A Consulting CFO (also called a Fractional CFO or Part-time CFO) can give you many of the benefits of a full-time Chief Financial Officer for a fraction of the cost. A Consulting CFO works with a small number of companies to provide experienced financial management to businesses that don't need or can't afford another full-time executive. A Consulting CFO, like a full-time Chief Financial Officer, will usually oversee (and/or perform) basic accounting and other typical finance tasks needed at a startup. In addition to these basic activities, a Consulting CFO (like a full-time CFO) will work to improve company performance by focusing on the following activities:
• Report, analyze and forecast the company's financial activities, including revenues, costs, cashflows and key performance indicators.
• Lead efforts to control costs and preserve cash.
• Ensure the company will have sufficient capital to meet its needs, by optimizing available resources and seeking new capital through borrowing and/or equity investment.
• Help clarify strategic goals and steps needed to achieve them. Strategic goals might be growth, financial stability, geographic expansion or an eventual exit from the business by a business owner who would like to realize the value created in the business and move on to other endeavors.
• Protect the company's assets by implementing management controls, investing financial assets in appropriate financial institutions, helping to secure and insure physical assets, and protecting intellectual assets from theft and ownership defects.
• Contribute to revenue and cash growth by helping to structure and/or negotiate important deals with customers and distributors, implementing strong billing and collection practices, and optimizing pricing.
• Help the team navigate transactions and other challenges, such as financings, systems changes and critical strategic deals.
• Solve problems that are difficult to predict, but certain to occur.
How involved should a Consulting CFO be?
To maximize benefits, a Consulting CFO should be a continuing member of your team that is around enough to understand the flow of your business. A Consulting CFO should work at your office at least monthly; and as often as one or more times per week. Your Consulting CFO should know your management team (possibly including investors and board) and their concerns. A Consulting CFO can carry ongoing responsibilities, attend management meetings, and/or supervise the accounting, finance and admin staff. As needed, a Consulting CFO can assist company management in meetings with outsiders, such as banks, investors, customers and suppliers. Regular involvement in your business will enable your Consulting CFO to provide meaningful and timely analysis and advice, contribute a financial perspective to important decisions, identify risks, and lead financial initiatives.
Does your team need a finance person?
Probably. Most companies are started by technology or marketing experts who need help to organize, monetize, fund, plan, analyze and manage their companies - and to avoid trouble with taxes, business regulations and employment laws. Smart financial management will help you succeed and help you avoid costly mistakes (like setting a price that won't cover your real costs, mis-understanding your burn rate and cash runway, or failing to convince investors that you understand your business and its risks).
Does a startup need a full-time finance executive?
Probably not in the first few years, unless it has a financial product or specific challenges such as high transaction volume, out-of-control costs or complicated financing or partnership needs. Even if you don't need a full-time finance person, you do need financial management and a smart way to get it is to engage a Consulting CFO for much less cost than a full-time employee.
How to Start?
Send me a message and we can schedule a quick call. If it makes sense, we can discuss a possible project in more detail. I love learning about new businesses and look forward to hearing from you.