Editor's note: This piece was originally published in 2023 and has been updated to include additional resources.
Most startups don’t need a full-time chief financial officer. However, CFO-level expertise can help get new ventures off to a sound start and onto a path toward future growth.
A part-time CFO can help your fledgling business in four essential ways–stewardship, operations, strategy, and creating long-term business value.
Exactly what that means depends on your type of business. For example:
Positioning your company to grow right from the beginning allows you to sidestep common mistakes, take advantage of opportunities as they arise, and even set you on the right path to position the business for future acquisition/sale. A part-time CFO can explain what is needed practically and strategically to make your startup stronger.
Every startup should have:
Even startups face risks that require proactive protection, such as business insurance and health insurance for employees. Beyond that, there are other inherent risks.
For example, client or vendor/purchasing contracts can become problematic, for various reasons:
On the equity side, key person life insurance is vital. This provides protection in case stock needs to be transferred or if an owner or CEO dies and must be replaced.
Do you have (or need) non-disclosure agreements? Do you have equity shareholders? If so, do you have buy-sell or other shareholder agreements? While these are legal issues, a part-time CFO can advise on thefinancial planning implications.
Do you have the right bank partner to support you in this early stage of business development? Have they given you a line of credit? Are they pressuring you to put up personal assets as collateral? A part-time CFO can help strengthen your banking arrangements.
Businesses want to minimize their tax burden. A part-time CFO can help you be set up correctly for tax purposes. That includes how your business is organized and ensuring tax deposits are made accurately and on time.
An experienced CFO understands and considers taxation trends to shelter you from being negatively impacted. A common example for startups is the research and development tax credit.
A CFO has the experience to help you create a budget appropriate for your type of business. They can also help you set up and document accounting and monthly closing processes and create a checklist to catch items from slipping through the cracks, even as your company grows or as personnel changes.
Equally important for startups, they can help with cash flow forecasting.
A part-time CFO can help make sure everything is set up properly for your early-stage enterprise. They will provide the necessary tools for your business to function efficiently at its current stage. You won’t be overburdened with systems you don’t yet need, but you will be set to scale to the next level when the time comes.