The startup scene is exploding. However, entrepreneurs need to have their financial house in order in order to secure that capital, especially beyond the seed round. Leaders are often laser-focused on three critical areas in the early stages: creating their product or service, generating revenue, and producing cash flow.
They cannot afford to put their money in the wrong places, including the wrong people in the wrong jobs. Because an experienced CFO may command a large pay, most people do not regard hiring a CFO as a pressing requirement just yet.
A rising number of small businesses are turning to fractional CFOs for help. A business can obtain the benefits of having a senior financial executive they could not afford or even attract at such an early stage by hiring a part-time CFO.
A fractional CFO is often hired for a limited period to assist a company to develop its financial operations and secure its next round of funding. After that, the firm may decide to hire its own CFO and accounting staff. Fractional CFOs are just in it for the short term, and they are not looking for a full-time position.
Some organizations are keeping fractional CFOs on longer now that so many have adapted to working remotely. One of our customers, Countsy, for example, provides outsourced CFOs as well as whole accounting and HR departments to startups and developing enterprises in the technology and life sciences industries. Its company is now flourishing.
Whether a fractional CFO is employed for a short-term or long-term assignment, businesses are discovering that bringing in this knowledge early on may significantly alter their direction. Working with companies in a range of industries, I have noticed that those that hire a part-time CFO profit in three ways:
It is common for ambitious businesses to seek outside help to get their finances in order while they focus on developing goods and increasing sales. Most fractional CFOs have previously worked as corporate CFO and many a history in private equity or venture capital and have successfully guided firms to exit.