5 REASONS YOUR START-UP NEEDS A CFO (Part 2 of 2) 

In Part Two of 5 Reasons your start-up needs a CFO, we explore at what point a CFO will add the most value to your start-up. 

Whether or not a business start-up needs a CFO largely depends on the size and complexity of the business. 

In the early stages of a start-up, the financial needs may be relatively simple, and the business may not require a full-time CFO. Instead, the business owner or a small team may be able to handle the financial management tasks. However, as the start-up grows and becomes more complex, it may benefit from having a CFO to oversee financial planning, analysis, and reporting. 

Ultimately, the decision of whether a business start-up needs a CFO will depend on the specific needs and goals of the business. If the business is growing rapidly and has a complex financial structure, a CFO may be necessary to ensure the financial stability and success of the business. 

To determine if your start-up requires a CFO, evaluate yourself with the following questions: 

1. Does your start-up experience any issues with basic bookkeeping and record-keeping?
2. Are your fundamental financial statements well-organised? 
3. Can you access to key performance indicators such as customer churn, customer acquisition cost, etc. for your start-up? 
4. Do you possess an understanding of when your start-up will run out of cash, its burn rate, and expenditure categories? 
5. Does your start-up have a board-approved budget that outlines a plan to accomplish objectives? 
6. Do team members have projections and guidance on recruiting individuals to meet the company’s objectives? 
7. Are you finding it challenging negotiating the financial aspects of customer or supplier contracts for your start-up? 
8. Have due-diligence materials been created that prospective investors will require to invest in your start-up? 
9. Does your start-up have a long-term pricing, revenue growth scenario, and a budget that aligns with the strategic and financial vision? 
10. Does your start-up have policies and procedures around both general the operational and financial aspects of your business. 
11. Has your organisation been set up with the best corporate, financial and legal structure to manage and achieve growth as it occurs. 

If you answered “no” to Questions 1 and 2, you may require an outsourced start-up bookkeeper who is adept at managing your finances. If you answered “no” to Questions 3 and 4, consider hiring someone to assist with financial modelling or financial planning and analytics for your start-up. If you answered “no” to Questions 5 and beyond, it indicates that you may require the expertise of a CFO. For most start-ups, a part-time finance professional who is familiar with the industry can provide the necessary CFO level assistance.