Small businesses (aka SMBs) as well as startups in the San Francisco Bay Area and Silicon Valley often have growing pains in a variety of different functional areas. Yet in the desire to save short-term costs, small companies and tech startups sometimes make ill-advised strategic decisions (i.e., “penny wise, pound foolish”).
In this candid post by Janine Popick (former CEO and founder of VerticalResponse), she recommends that fast growing companies need to have a CFO help them sooner than they may realize.
Here are some key excerpts from her article:
“Company founders and CEOs are rarely equipped to handle financing strategies, budgets and dealing with investors.”
“If your company's revenue is growing quickly, you have new investors and/or you've received venture capital, it could be time.”
“I made the colossal mistake of not hiring experienced people because I was so concerned about saving money. I raised a small amount of funding from friends and family as well as my own money. I'll admit, I was scared; scared of what I didn't know.”
“We were at the point where we needed someone more experienced to not only run our accounting functions, but really look at our business model, the key drivers in our business and how we were managing those drivers. We had been using my Excel forecasts for years, which were outdated and did not capture and reflect all aspects of the business. Plus, this responsibility was just getting too big for me, especially considering the fiduciary duty I had to my shareholders. I felt I really needed someone at that level I could trust as a "partner" and fill in where I lacked in capability, as well as issues that were over the accounting manager's head.”
“[We] found an amazing CFO with the experiences we needed for our growing company. Within months he instituted policies that cleared up our accounts receivable to negligible amounts, and re-built a business model that I had been working off of for years. It was clear that he was far and above what an accounting manager alone could lend to our business.”