If you closely look at a startup, you will realize it is very similar to a driving school’s car which has two controls. One control is being handled by the CFO and the other by the promoter. The CFO then has to decide when is the best time to either apply gas to accelerate the company’s growth or when to use brakes. We will now take a much closer look at some of the challenges just about every CFO will have to deal with when handling a startup company.
One of the key services of a CFO for startups is to be the confidante and advisor of the entrepreneur, especially when they have differing thoughts and ideas when compared to the promoter. The CFO has to be capable of treading carefully between his mindset as well as his role so that he can know when to be cautious and when to take risks. Additionally, the CFO is also responsible for communicating with the promoter so that they understand and agree on differing views which are essential so that the company is successful in achieving its main goals which are shared by all parties.
Look At Both The Big & Little Picture
One of the differences between a larger company and a startup is that the direction of the company is not yet cemented and the CFO will need to have a strong input in this direction. As a result, a different mindset is required of the CFO where they need to not only look at reducing costs within the business but also look at it from an entrepreneurial point of view. Of course, the small details are extremely important, but the larger picture is just as important.
The CFO will be the person who stands between the entrepreneur and his or her investors. As a result, the CFO will need to have excellent communication skills to handle these two groups. They will need to make sure that the entrepreneur remains accountable and is able to handle reduced control of the company while also managing the expectations of various investors.
Be Able To Do It All
At the very beginning of any startup, the company would not have the money nor resources to hire certain types of employees and specialists to undertake various functions for the business. As a result, the CFO must fill in the gap and be able to handle these roles which may include doing so in the technology and legal arenas.
One of the biggest jobs a CFO will have is to handle the precarious cash-flow situation of the startup. Basically, they would need to know how to stretch every dollar the company has while ensuring that necessary payments are sent out as late as they can. They will need to be innovative in their thoughts and actions and ensure that every single asset that the startup owns is completely utilized for the growth of the business.
Making Sure The Company Is Well Structured and Running Properly
Lastly, the CFO is responsible for making sure that the company is structured well for the future and that its processes and reporting are on point. Reporting may seem unnecessary at first but it is the best way to know exactly what is going on in the company. However, the CFO will need to manage this as it is quite easy to let too much data and reporting to overwhelm and draw the business down.