An On-Demand CFO – Now Even More Critical for Startups

Startups are hard. Most fail. Even ones with great ideas. So, how do you maximize your odds of success? Especially in today’s COVID-19 crisis and downturn? You hire an on-demand CFO.

You hire the best team you can afford. Including a strategic CFO with the skills, experience, and vision to be your business partner and trusted advisor.

On-Demand CFO? Or, Can I Get Away With Just an Accountant?

Accountants help organize your financials and by creating reporting for your internal and external stakeholders. Accountants are also helpful in setting up an early-stage startup’s financial processes and controls. Where a CFO comes in to play is with forward financial thinking – a CFO helps you chart the best course for moving forward. A CFO builds financial modeling for scenario planning and dashboards with important metrics so you can make decisions with the best financial information available. A CFO helps with fundraising, Board and VC presentations, and acquisitions if necessary. A CFO is also another executive voice to help with general high-level thinking and strategic planning. As we navigate the current COVID-19 downturn, it’s even more critical for startups to work with a CFO to plan strategically.

Shouldn’t I be Doing This Myself as the CEO?

No, even though most startup founders are capable of filling the role. The CEO/Founder needs to drive the startup’s product and sales, build the team, and be the company’s face to the outside world. Time spent in finance is time spent away from your highest and best purpose.

But Can I Afford and Attract a Top-Quality CFO?

Yes! Because you can pay only for what you need. We live in an on-demand world. Don’t buy servers – rent time from AWS. Don’t buy a car – book an Uber. Don’t buy a vacation home – go on Airbnb. And don’t hire a full-time CFO (yet) – use an on-demand CFO from a reputable firm. You probably only need 0.5-2.0 days per week, can find A-list talent with expertise in your field, and be up and running in days. And when you’re ready to make a change, it’s simple to move on or upgrade to a full-time resource.

What Does an On-Demand CFO Provide?

Navigation Through the COVID-19 Crisis and Downturn

Today’s health crisis is changing daily, but what is certain is we are now in an economic downturn. Financial decisions and a startup’s cash position have never been more critical. A CFO will help you extend your cash runway. Using financial modeling, coupled with scenario and contingency planning, a CFO will also help you make the right decisions to improve your chances of surviving the downturn.

Your Business and Financial Model for Scaling

How will you monetize your idea? How should you price and deliver the product or service? How much cash is required to hit your next milestone? When do you need to raise your next round? What resources can you afford, and when should you deploy them? How do you know if it’s working and when/how to pivot when the market gives you feedback? Your CFO helps you answer all these questions.

Leverage for Your Management Team So You Can Punch Above Your Weight

The CFO is a core member of your team, even if they are not sitting in your office 50 hours per week. They bring expertise, contacts, and credibility to your company and can help you manage all the internal/administrative functions so your time can remain focused on building and growing the top line. A proven CFO also gives board members, investors, and other outside stakeholders confidence in you and the company.

A Strategic Partnership and Key Sounding Board

Startup Founder/CEO is a lonely job. The best CEOs have trusted strategic advisors that they can rely on to help them execute their plan and give them honest feedback. This is hard in an early-stage company where you can’t really afford to build a large team of experienced talent. And more times than not, the rest of your senior team is drinking from the same Kool-Aid jug that you are – that’s why they’re there. Your investors and advisors can help play an important role here, but they have lots of other demands on their time and priorities. Your CFO is dedicated to your success and can bring a critical outside perspective. Most likely, he or she has seen many of the issues you’re facing before – and can access the knowledge of the rest of their firm on your behalf.

An On-Demand CFO Increases Access to the Capital You Need

Cash is the lifeblood of your company, especially in this environment! Most likely, you will want to tap external sources now or in the future. This could be from equity, debt, strategic partnering, public offerings, M&A, or some other source. Your CFO can help guide you on how to approach these capital sources, how to craft the right story, answer their questions and due diligence requests, negotiate and close the right deal and maintain good relationships with these new partners post-closing. He or she will also make sure you’re always ready to raise the next round – preferably before you need it.

An Immediate Return on Investment

Because you only pay for what you use, a part-time CFO can be surprisingly affordable. And if they deliver on even a subset of what they have to offer, they should pay for themselves many times over in terms of both your bottom line and your probability of success.

It’s clear startups need a strategic CFO on board, especially for getting through this downturn. And it’s also clear that using an on-demand CFO makes the most economic sense for many startups.

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Burkland offers expert CFO services, accounting services, and tax services to startups across the United States. Reach out to us to learn more about how we can help your startup or portfolio company navigate the COVID-19 health crisis and downturn.