Overview
You may have a great business idea that you have put into action by setting up a company. You have the necessary skill sets and have gathered talented resources to form a team that works on your business goals. This is great but do you have the knowledge and expertise to manage finances? Do you know how to handle your expenses? How do you keep track of what is working and what is not and the areas that are causing a leak? Can you use the financial information available to present to investors? You may be a nascent company and cannot afford a full-time CFO. You wouldn’t have the bandwidth even if you have the skills either to manage the finance function. How do you resolve this conundrum? What options do small businesses have? Well, one viable option is the hiring of a virtual CFO who can provide financial acumen and expertise to your growing venture. How would you know when the time is ripe to hire a virtual CFO? Here are some telltale signs that scream out that your business needs one right now.
Lack of financial acumen – It is not mandatory for a CEO to possess financial acumen but it can become a roadblock in the growing stages of a business. Having someone who can handle the finances and present a true and fair picture of how the business is doing would be a great asset. However, as a fledgeling business, you may not be able to afford the salary of a full-time CFO. Here is where a virtual CFO who can deliver the work remotely will be of great help. You can tap into their financial expertise at a fraction of the cost and it would still add immense value to your business.
Mounting expenses – When the business is new, you may find yourself spending indiscriminately without keeping tabs. Unless you track expenses on a regular basis, it may not be easy to keep control of which head of expenses is causing leakage and whether these expenses can be curtailed. A virtual CFO could easily draw up your accounts on a daily basis, run the expense reports and do a variance analysis to identify major expenses and drains.
Low profitability – As a business, you may have multiple streams of revenue but your profitability may still be very low. It is possible that great profits in one channel are offset by losses in another. Having a virtual CFO could help you make sense of your financial statements and identify the best performing and worst performing revenue channels so that you can undertake course correction.A regular review of financial information is the only way to keep yourself abreast with the financial health of your business and this is critical for your future.
Lack of clarity about financial reality – It is impossible to take a business forward unless you are clear about the current reality. Financial reports do a post-mortem of current reality and a virtual CFO would be the best person to analyze these reports and give you a first-hand view of how the business is working on various fronts and what can be done to improve in future. All future plans will be hinged on the present reality and unless you get a clear view of the present, it is impossible to extrapolate the future.
Need to increase scalability – All businesses need to plan for growth in the future. Businesses need to be scalable for rapid growth. Whether you plan to follow a franchise model or set up your own branches, there is a need to expand and grow. You may also be looking at a merger and acquisition option for growth. In all these cases, you would need the financial expertise of a professional and here is where the virtual CFO can step right in and help you.
Fundraising requirements – As a startup grows, they try to obtain funding from investors and this involves making detailed presentations to them regarding the financial health of the business. Potential investors would be interested in the valuation of the business, prospects of growth, the risk profile of the business and more. A virtual CFO would be able to present the financial reports and explain the nuances to investors in a better fashion. They would also be able to handle the requirements associated with fundraising.
Conclusion
Do not ignore the signs that your business may be needing a virtual CFO to help you navigate the curves of business growth. There are some things you should leave to subject matter experts and finance is one of them. Hiring a virtual CFO may be one of the best gifts you can give your business as you prepare for the next stage of growth. It will be a win-win solution for all stakeholders and a cost-effective one at that.
Startup Movers is a company of professionals that specializes in offering financial and legal services to new companies that are being set up. They can offer you virtual CFO services that will help you manage your finance function better without the burden of paying fancy salaries and running an in-house finance function. You can call them on 7011808002 or visit https://www.startup-movers.com/ for complete details.
