Warning signs when outsourcing

If you’re a new start-up, you might not feel the need to outsource bookkeeping or expense management but it’s inevitable you will eventually source more experienced assistance.

Once you find yourself at this point, you’ll want to make sure your final decision is the best one for your business.
Hiring an outsourced CFO is one way to step up your game when it comes to managing your startup’s finances, while keeping your cost structure flexible.
But it matters a lot who you hire. Early Growth Financial Services have developed this handy guide which you might find really useful when finding the right fit.

How to find an outsourced CFO

  • Ask for referrals — Tap your network of service providers, fellow founders, advisors, and incubators/accelerators/co-working spaces.
  • Look for fit — Don’t necessarily jump at the first person/firm you meet. Take fit into account and check credentials, background experience, and skill sets against your business needs.
  • Check out the client list — Ask candidates for the names of clients who are representative of the range of services offered. If a firm has experience working with clients similar to yours in terms of industry, stage, etc., that’s a good sign that they have the expertise that your company needs.

The Interview Process: Asking the right questions

Outsourced CFOs can offer so much more than just “handling the numbers.” Beyond financial forecasts, budgets, business modeling, financial plans, pricing, revenue recognition strategy, cash management, cash-burn analysis, monthly reports, and M&A support, CFOs can help with investor relations, strategic planning, and so much more.

It will be easier to find the right fit, if you’re clear about what you want and need from the outset — while still being open to listening to CFOs’ suggestions. The key is to find an outsourced CFO that can meet your current needs and grow with you — at least until you reach the point where you’re ready to bring on someone in-house.

Start with these questions:

  • What specific experience do you have working with startup businesses? Startups demand a unique skillset of CFOs. Of course, they’ll need the obvious ones like accounting credentials, expertise with doing financial projections, and managing budgets. But startup CFOs also need to have good negotiation and strategic planning skills as well as extensive contacts with potential funding sources.
  • What’s your domain expertise? Different people and professional services firms may specialize in or have strengths in a couple of specific areas. Make sure that the ones you consider can offer you full-service support.
  • How do you typically work with clients? You’re trying to understand if this person has the capability and desire to partner with you in the development of your financial infrastructure — that encompasses the ability to wear multiple hats plus the flexibility to adapt to quickly changing circumstances.

Your relationship with your outsourced CFOs should be an ongoing open dialogue. Your CFO should be a trusted business partner that helps you with all aspects of your business.

And remember, you don’t outsource to make responsibilities go away, you do it to enable your team’s continued focus on your core skills and chief objective: growing the business.

Source: Early Growth Financial Services, edited by NK Consultants.


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