How Does Having a CFO Help You Get Funding as a Start-Up?
As a CEO preparing to seek funding, it is easy to feel like you have more questions than answers. A CFO can be a key partner in answering those questions—or an expensive asset, offering more confusion than solutions. Make sure you are hiring the right person to grow your business and put the guessing to rest.
Why You Need to Bring On a CFO
79% percent of investors hold the CEO accountable for financial errors. A CFO will make sure there are not any before you walk into your investor meeting. It is essential that all your documentation is in order and easy to understand. With a CFO, you can rest easy knowing your financials are entirely clean and organized.
Investors are looking for security, and a CFO offers exactly that. CFOs with experience obtaining funding will be able to identify and address any discrepancies that might be a red flag to investors. Plus, their ten plus years of experience will make your investors feel like they are making a safe decision.
CFOs also offer a higher level of expertise when it comes to building your business plan rather than a controller or an accounting manager. A CFO can help you plan where to spend any invested amount to maximize your budget.
When to Bring On a CFO
Ideally, you should bring on a CFO three to four months before you plan to start meeting with investors. That way, they have time to learn your business, organize and improve your financials, and strategize which investors to target.
Once you have started meeting with investors, the CEOs role will change as they focus on growing those relationships. The CEO will likely lose track of day-to-day business tasks and spend most of their time managing investor-related fires. A CFO can help run the business during this time, meaning lower stress levels for both you and your employees.
Once funding is granted, a CFO can help maintain investor relationships. Many investors have their own compliance standards your company will need to meet on a reoccurring basis. A CFO can help you track and plan around those metrics. Beyond reporting, CFOs excel at business strategy and can help you determine the best way to spend your funding for optimal growth.
Where to Find the Right CFO
You can hire a full-time CFO or bring on outsourced CFO support. The type of CFO you decide to hire depends on several factors including your company size, your available resources, your current funding stage, and your anticipated engagement length. Evaluate your company’s needs to determine which option is the best fit for your company.
Small companies and those seeking first-round funding will likely only need a full-time CFO while seeking and securing funding. Once funding has been granted, these companies will only require part-time support. In this case, an outsourced CFO is a great way to avoid paying a full-time salary for a part-time workload. This is a worthwhile option to consider, seeing as even a small company’s CFO comes with a six-figure price tag. And most CFOs will not take kindly to a company filling their schedule with bookkeeping tasks. Consider hiring an outsourced, full-time CFO during the seeking and securing phase; then decrease their hours once you have the funding, so you only pay for the time you need.
Another major benefit of an outsourced CFO is hiring for specific tasks or experience. You can outsource a full-time CFO to help you seek funding and to help you manage the business after funding is granted. An outsourced company can provide someone who specializes in securing funding, then provide a new CFO who specializes in management or internal growth after the funding is granted. You get all the specialization and expertise, but you do not have to deal with any of the hiring.
How We Can Help:
Simply put: if you are seeking funding, you need a CFO. A CFO will help you seek and secure funding, as well as provide guidance on how to spend it. Hiring a CFO does not have to sink your business in that pre-funding stage when you may be strapped for cash. Weigh your options and make the best decision for your business. If that is still overwhelming, give NOW CFO a call and one of our CFOs can walk through which option is best for you.
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