How a CFO Can Lead a Scaling Startup to Success
Having worked for many startups over my career, the CFO function is typically carried out by the CEO aligned with their leadership team, if they have one, along with an accounting function and an advisory board for strategic guidance until the cash position or the business needs make the CFO role a reality.
The blog post from Finance Alliance, “How a Startup CFO Can Lead a New Company to Success'', outlines very well the roles and responsibilities of the CFO of a scaling company once this role becomes realized but I would highlight and augment a few based on my recent experience working with a very successful, data-driven, scaling e-commerce company.
COLLABORATIVE CULTURE
First, the CFO can help lead a scaling company to success by championing a high-performing culture. Meaning there is collaboration, trust, and transparency to create the environment to challenge the status quo as this blog mentions but I would argue this relationship should expand outside of the CFO and CEO and should be worked on throughout all teams and relationships within an organization. This culture will be the foundation for your CFO to be a true strategic business advisor and partner to the organization. The CFO should support initiatives around collaboration, cooperation, and developing problem-solving skills company-wide.
BUSINESS DATA AS ASSETS
Second, the CFO needs to be a champion of the data of the organization as these are assets of the firm that can be leveraged to create further future value or accessed and drilled into during times when relatively quick pivots in the strategy need to take place. To create value in the organization the CFO needs to understand the underlying data that aligns with the key business processes that drive growth/revenue, make the operations more efficient/improve margin or reduce risk. As the Finance Alliance stated, know the business, inside and out. The CFO should support data literacy programs to make the organization model fluid and responsive and better aligned with its strategic business objectives.
CASH IS KING
Third, during times of scale and managing growth, the old finance adage always rings true, cash is king. Understanding the cash position, burn rate, and investment options or uses of cash and ensuring the appropriate levels of the leadership understand this as well. What costs are variable? What costs are fixed? What is the anticipated ROI, tangible/intangible of that investment? Ensure leaders understand the P&L and cash impact their business processes have on the overall business and strategic objectives. Cash management is critical and requires solid forecasting and business and industry awareness. As the startup CFO you need to lead the charge to effectively manage cash flow. If a startup’s cash position is not properly managed during the growth phase you may unnecessarily dilute ownership or take on additional operating costs through leveraged working capital. This example just drills deeper into the Finance Alliance’s point of focus on scalability and strategic business planning.
A scaling, startup CFO can help lead a company to success by focusing on these three key areas; enabling a data-driven, collaborative CULTURE, treating DATA as ASSETS, and managing CASH as king!
Want to learn more about scaling your startup company with data? Reach out to us at Stacked Analytics.
