With increasingly volatile conditions thanks to the impacts of COVID-19, the war in Ukraine and rising global inflation, equity capital markets have cooled. This has serious implications for high-growth startups.
Even the most high-potential startups may struggle to raise capital in this environment. As such, they will need to be able to make their runway go further. For those that do look to raise capital, they will need to be able to demonstrate viability and profitability, as well as financial prudence. Keeping costs under control will be essential.
The challenge for startups is that there’s never been a more important time for sophisticated financial governance – and yet the costs of retaining a CFO are now likely to be too high.
So, what’s the alternative?
What are CFO services?
CFO services involve an experienced third-party business advisory or CFO services firm taking on the responsibilities that a CFO would usually have in your business, in an outsourced capacity. They offer high level financial advice and expertise for your startup.
Through utilising CFO services, you can leverage their extensive experience to reveal financial opportunities and overcome financial challenges. In the current environment, this is a particularly useful alternative for startups who may be looking to move away from the in-house CFO model due to budgetary constraints.
An outsourced CFO and their team will offer a range of CFO services to help your startup, including:
- Offering strategic financial advice best suited for your business, including making financial recommendations on how your startup can be run in a more financially efficient manner
- Helping you make your runway last longer through cutting costs and finding efficiencies
- Supporting you to bring the business into profitability, or maintaining profitability amid the challenging conditions
- Helping you raise capital when possible, or alternatively developing an alternative strategy in the event that your plans to raise capital have been derailed
- Developing detailed reports, forecasts and budgets to measure financial performance, including cash flow and profitability
- Providing advice on tax planning, succession planning and asset protection
- Ensuring compliance by setting payroll and financial management policy
What are the benefits of CFO services?
Utilising CFO services offers an array of benefits for your startup. These may involve:
Lower costs
As a startup, you may not be able to afford to employ an in-house CFO, however, their capabilities are critical for the financial governance of your company. CFO services are significantly cheaper than employing a CFO in-house for your startup. This also means the ROI is much better.
Utilising an outsourced CFO also provides flexibility, in that you are only required to pay for what you need, and can change this at any time. As you will be able to scale up and down as necessary with CFO services, you will not sacrifice financial expertise and will be able to stay within budget.
Increased value
Although you may have one main point of contact, an outsourced CFO utilises an entire team to work on your financial governance, for the same price as one. This means there are more minds dedicated to the financial strategy for your startup. This represents incredible value, as your startup will gain a group of experts for less than the price of employing a CFO in-house.
Expertise and strategic advice
CFO services exceed the knowledge and expertise of a typical accountant. This is because they aim to unlock any opportunities and address any concerns within your startup from a strategic point of view. An outsourced CFO will be able to use their expertise and experience to advise you on important financial decisions which will significantly impact your startup. These decisions may revolve around ways to tighten spending, invest, source capital, expand or reduce product lines, or restructure. CFO services offer a high level of sophistication around your financial governance, which is essential for startups who are trying to reach their full potential while navigating increasingly challenging conditions.
Signs your startup may be ready for CFO Services
There are several indicators that now may be the time to consider accessing CFO services.
- You’re considering moving away from employing a CFO in-house
- The costs of a CFO are too prohibitive
- Your plans to raise capital have been derailed
- You need to make your runway last longer
- You need to get your costs under control
- You need to become profitable
- You need to manage the impacts of inflation
- You need to demonstrate viability
- Your finances are becoming more complex
Interested in CFO Services for your startup? Keeping Company has strong experience working with high-growth startups to manage costs, secure profitability and raise capital. Contact us today.
At Keeping Company, we’re not just accountants, we’re business people too. With our counsel, your business can reach its full potential.
We have a team of experts; Cloud Accountants, Business Advisors, Finance Specialists working together and ready to help, contact us today.
For all media enquires please contact Tracy Miller, CMO, Keeping Company 0414 898 452.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.