The current economic uncertainty has many businesses closely evaluating their current and future staffing needs. While some positions are being cut, especially in the immediately impacted sectors such as hospitality and travel sectors, many businesses are strategically hiring financial professionals into executive leadership positions during the downturn.
While finance might not be one of the most exciting parts of running your startup, it undoubtably is integral to your startup’s success.
According to CB Insights, two of the top five reasons startups fail is because they lack significant financial expertise, i.e., they create products/services that have no market need and run of out of cash.
Companies that previously had tasked their CEOs with handling finance functions are now hiring dedicated CFOs (or outsourcing CFO roles to reputable third parties) to ensure they will be able to weather the new economic storm.
With ambiguity over how long businesses will need to keep their offices and storefronts closed paired with unpredictability in the stock market, business owners and CEOs are feeling increased pressure to make critical strategic financial decisions for the health of their organizations.
That is why having a seasoned financial expert on your side is critical for startups. Broadly speaking, a finance leader will help you structure your costs, create better investment channels, chart out strategic roadmaps, and efficiently structure future deals.
As a startup founder your challenges change constantly as the business evolves from the initial ideation stage to the subsequent rounds of institutional financing.
Before we dive into the specific use-cases of the finance function in a startup, let’s look at the two broad components of the finance function:
As you embark on your growth journey a reactive approach to financial management is not enough to identify risks and opportunities affecting your business.
Also, as your business evolves, your accounting process must follow suit and you will need a partner with the right skills and expertise to correctly record, report, and plan while keeping and on the cash-flow.
Here’s a look at some of the specific use-cases of finance through a startup lifecycle:
Most B schools tell you that an accountant or controller is responsible for accounting and a CFO is responsible for finance, however, this academic thinking does’nt apply to the world of startups.
You need a financial partner that brings crucial information to the table which will impact your company’s top and bottom line while setting up a robust operations strategy.
You will need someone who can help you find the right balance between processes, structures, and reporting in an agile environment that will enable you to scale rapidly and sustain growth.