The position of chief financial officer (CFO) brings many important values to startups. According to experts, startups should recruit CFO as soon as possible.
According to Forbes, having a dedicated CFO is crucial for a start-up in its early days, even if this person only works part-time.
A study published by the US Small Business Administration (SBA) shows that only about half of startups survive after the first five years. One of the main reasons for startup failure is the lack of a solid financial strategy.
“CFOs bring invaluable expertise to startups, from preparing financial reports, to building a fundraising strategy, to managing cash flow, thereby ensuring that your company is on the path to sustainable development,” Forbes emphasized.
A survey conducted in the US also showed that 69% of small business owners lack confidence in their ability to make financial decisions. Instead of fumbling with financial numbers, business owners are advised to have a real CFO by their side. Decisions based on specific numbers made by the CFO will be a useful basis for founders to adjust the model, keeping up with market changes.
In terms of fundraising, the CFO will know when the start-up should raise capital and how much capital is enough. Among many options, the CFO can advise the founding team on which option is suitable for the development of the start-up, as well as propose a plan for effective capital use in the future.
Start-ups that have a CFO on their leadership team will be more likely to gain the sympathy of investors, because that shows that the start-up has a clear understanding of the company's financial situation and can provide clear and accurate financial reports.
Later, as the start-up expands, the CFO position becomes even more important as financial tasks become increasingly complex, from payroll management, revenue and expenditure, to tax compliance, financial reporting, etc. If there is a CFO, implementing an effective accounting system will help the founder save time and resources; otherwise, the founder will easily become overloaded.
“Startups need to be concerned with money management. How much are you earning versus how much are you spending? I recommend hiring a CFO early in your startup journey, someone who can help you analyze your past finances and advise you on how to improve in the coming year. With this valuable knowledge, your chances of starting a successful business will be much higher,” said Charles Brecque, CEO and Founder of Legislate Technology Company.
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