If we had to summarize the advantage of startups over large companies in a single word, it would be “agility”. Although earlier-stage companies are almost always outnumbered in resources, they have the key benefit of being able to identify and respond to opportunities and threats faster than their larger competitors. Anything startups can do to develop and leverage this advantage is worth a closer look.
Financial Planning & Analysis (FP&A) is one of the most powerful tools startups can use to become increasingly agile and boost their competitive advantage against larger competitors as well as other startups. Plus, when it comes time to raise funds, nothing makes a startup’s executive team more credible than supporting their stories with reliable, real-time data.
Financial Planning & Analysis (FP&A) is one of the most powerful tools startups can use to become increasingly agile and boost their competitive advantage…
For an introduction to FP&A for startups, see How Does FP&A Help Startups Scale?.
As Fractional CFO and FP&A partners to hundreds of startups, the Burkland team has seen powerful examples of this competitive advantage come into play recently. From the 2020 Covid pandemic to the economic shift in 2022, the past couple of years have been anything but expected. We’ve witnessed first-hand the power of leveraging real-time data to identify and proactively respond to the unexpected.
Here are three specific examples of startups leveraging real-time data and FP&A practices to scale smarter.
Three Recent Client Use Cases of FP&A:
- Demonstrating Maximum Value for Fundraising – A startup was getting ready to raise their Series A round. Before meeting with prospective investors, the company partnered with Burkland to explore and pinpoint the best possible ways they could reach their growth and revenue goals. Together, we developed a diversified opportunity set of four different ways the client could reach their goals. This diversified opportunity set gave investors the confidence to write a check for 5x what the company was originally looking to raise.
- Deciding Whether To Pivot or Not – A first-time SaaS founder raised their seed round in late 2021 and used the funds to build an enterprise solution over the next year. By late 2022 the company was considering whether they should stay exclusively focused on enterprise clients, or leverage their technology into a new suite for consumers. Their Burkland CFO, with the help of a Burkland FP&A team member, analyzed the additional incremental spend, required headcount, burn rate, and the impacts on timeline and runway. At the end of Burkland’s analysis we identified that a pivot towards consumer made good business sense for the company, and they are now ramping up a version of their technology suite for the consumer market.
- Determining Where to Invest Marketing Dollars – Marketing resources are precious at startups. It’s essential to put your marketing dollars into the channels and campaigns where they’ll produce the most growth at the best LTV: CAC ratio. A Burkland client recently engaged their fractional CFO along with our FP&A team to gain a service-level understanding of which marketing and sales channels were most profitable. After gaining visibility to the necessary data and performing a detailed analysis, we clearly saw that the majority of the business the company was winning from certain channels turned out to be the least profitable. Better understanding which channels were more lucrative than others, the client shifted its growth strategy to those specific channels and saw a significant swing in their future year forecasts.
Startups of all sectors, sizes and growth stages have the opportunity to use FP&A to leverage their data and scale smarter. FP&A can assist your Finance Team as a stand-alone service, or in support of your fractional CFO. If your startup isn’t ready to invest in a fractional CFO, FP&A bridges the gap with solid financial modeling and real-time analytics. If you’re already working with a fractional CFO, Burkland’s FP&A services offer a cost-effective support resource to free up the CFO’s time for analysis, fundraising, process improvements, board reporting, and other strategic initiatives. FP&A team members are highly proficient in Excel and Google Sheets, pivot tables, conditional formulas, import ranges, and of course, charts and graphs. The key is giving your startup the agility to scale faster and smarter by leveraging your company’s data for decision-making, including data hidden beneath the surface.