1. Raise capital
A CFO is crucial in raising capital from VC’s, angels, banks, and non-bank entities. The fundraising process can be very complex and time-consuming for a CEO or owner to do alone.
2. Increase profitability
Improving profitability requires expert analysis and strategic insights. An experienced CFO identifies operating areas where costs are too high or inefficient processes exist (e.g., marketing effectiveness, Customer Acquisition Costs, etc.)
3. Improve cash flow
Approximately 80% of startups fail within the first 18 months due to poor cash flow management. A good CFO identifies the key drivers of cash flow (e.g., profitability, working capital, capex) to help companies to grow and compete effectively.
4. Establish KPIs
Key Performance Indicators (KPIs) help a company measure progress toward critical goals.
An experienced CFO provides meaningful management reports with key metrics tracked to help the CEO run the business.
5. Develop board reports and presentations
The CFO develops the reporting materials (e.g., board presentation, financials) provided to the board. This enables the CEO to lead and engage the board more effectively.
6. Manage investor relations
Investor Relations is a key area for both the CEO and CFO.
High quality communication helps the CEO maintain good relationships with investors to drive valuations and investor interest.
7. Manage banking relationships
An experienced CFO will develop relationships with key banks while keeping them fully updated to gain more favorable terms. The CFO will also provide the bank with a credible business plan which takes into account previous track record including debt and cash flow history.
8. Scale the organization
The strategic CFO creates a roadmap for the CEO to help grow the company efficiently. The processes that a startup uses often prevent it from growing cost-effectively.
9. Manage growth
The CFO develops a financial plan (including sales, costs, hiring, cash flow, capex projections) to provide a strategic framework. Without a financial model, a company is running blind regarding key decisions.
10. Lead M&A process
The M&A process is very stressful and complex for a startup or private company. The CFO can lead the many
different activities such as negotiation, term sheet, valuation, due diligence and closing.