Top 5 Reasons To Hire A Virtual Outsourced CFO For Your Startup
Peter Drucker once said, “You can’t manage what you can’t measure.” As a startup founder, you should keep that quote in mind as you build and grow your startup. Organizing, managing and planning the finance part of your startup will definitely propel you to success. You need an expert to help you out though. You might consider hiring a virtual CFO for your startup because of these reasons:
Reason No. 1: Huge savings
Smart founders are quick to point out this benefit. By hiring a virtual outsourced CFO for their small businesses, they don’t need to pay the cost equivalent of a full time CFO but can still get the same service they need. There are no benefits and other perks to be paid too. Depending on the stage of your startup or the industry you are into, you can use the huge savings to reinvest into more important areas such as technology, product and growth.
Unless you are a fintech company, hiring a in-house CFO from pre-seed to Series A of your business might just result in hiring an expensive accountant so it is best to hire a virtual CFO instead.
Reason No. 2: Expertise beyond accounting and tax compliance
Not all accountants and tax professionals are CFO material. You probably are employing some bookkeepers and accountants right now and chances are they have limited skill sets such as data entry, basic financial statements preparation and monthly tax compliance. That’s fine and that’s the way it should be in the beginning.
If you want to grow your startup though, you need more than just reporting historical numbers and taxes. You need an expert not just in accounting and taxes but also in financial planning, cash flow optimization, deals and partnerships evaluation, fundraising, investor relations and strategic value creation for your business. That’s the job of a truly competent CFO.
We’ve heard of startups that failed due to a number of reasons: product-market fit, tech or product failure, unsustainable growth and failure to pivot effectively. Most of them wouldn’t have failed had they had access to a CFO dashboard (or probably they have CFOs but they didn’t listen at all).
Reason No. 3: Flexibility and scalability of VCFO services
A startup, by definition, is a company seeking, developing, and validating a scalable economic model. It’s a high risk, high reward undertaking with an inherently dynamic operation that’s why in hiring for startups, the bible saying “many are called but few are chosen” often applies. It’s no different in looking for a finance person who can give you the right service you need.
By hiring a virtual CFO for your startup, you are assured of flexibility and scalability. Virtual CFOs are finance and business experts leveraging on their solid skills and years of experience with many clients. Such skills and experience allow them to move quickly and deliver impactful services for your startup. Marrying their knowledge and experience with the usage of right technology, they are able to save time and effort which gives them the scalability needed to service your business without adding up too much cost.
Reason No. 4: Increased trust and credibility with lenders and investors
Having a virtual chief financial officer for your startup not only enhances your startup internally but also externally. Startups' basic need is funding to help them get-off the ground. The funding sources such as angel investors, venture capitalists, private equity firms, banks and even large corporates with investment arms would normally ask about your unit economics and financial projections to see the financial viability of your startup over their holding period. If you are a founder with no corporate finance or haven’t experienced it before, then you definitely need to hire somebody who can do this for you. A proven, competent, and trusted virtual CFO is what you need for this purpose.
Reason No. 5: Unbiased advice
Because a virtual external CFO is an established expert and not an employee of your organization, he is in the position to deliver to your company “the good, the bad, and the ugly” without any bias. It is unlike the case of a full time CFO who doesn’t have the guts to tell you or the organization the bad news because of the fear of reprisal from within the Company. Even top companies usually hire management consulting firms (e.g., McKinsey & Co., Bain, BCG, etc.) to “fix things'' internally. As a founder, you want to have an independent and expert view on things surrounding the finances of your startup and retaining a virtual external CFO can definitely help you.
So, how do Virtual Outsourced CFOs work?
They work very flexibly depending on your needs. It can be a regular once a week, once a month engagement, or a project-based one ranging from weeks to months. They work with your management team flexibly too. The part-time, contract nature of the engagement makes it an affordable option that can pay for itself in sound business decisions and a stronger organization.
What do you get from our Virtual CFO services?
The Virtual CFO Services is the premier service offering of Olos Consulting Group. We successfully helped our startup clients get organized, strategize, launch, get funded and sealed million dollars worth of deals. With our proven skills and experience in identifying opportunities and coming up with financial strategies, our Virtual CFO solutions will take your business to the next level. Send us an email at firstname.lastname@example.org to book a 1-hour free consultation.