As a startup founder, you wear many hats. In the early stages, you may find yourself managing your company’s finances while also focusing on growth. But at some point, handling payroll, reconciling accounts, and understanding your cash flow can start to consume too much of your time—time you should be spending on strategy and building your business.
So, when is the right time to hire a financial leader, and should you opt for a full-time CFO or a fractional team? Let’s break it down.
The Pain Points: Why You Might Need Financial Leadership
1. You’re Trying to Manage the Finances Yourself
In the beginning, managing the books might seem doable, but over time, things get more complex. As your startup grows, you’re no longer just coding transactions; you’re dealing with payroll, tax compliance, employee reimbursements, and increasingly complex financial reporting. At this point, trying to handle everything yourself can result in mistakes or missed opportunities.
2. Part-Time, Inexperienced Staff Isn’t Cutting It
Maybe you’ve hired a part-time bookkeeper or an admin to handle some of the day-to-day accounting, but you’re not sure if they are making mistakes, or they lack the expertise to provide you with the strategic insights you need. While they can manage transactions, they likely aren’t equipped to give you a clear picture of your business’s financial health or help you make data-driven decisions.
3. You’re Spending Too Much Time on Low-Level Tasks
As a founder, your time is one of the most valuable assets to the business. If you find yourself spending too much time on tasks like coding transactions, running payroll, and chasing down expense reports, it’s a clear sign you need support. You should be focusing on scaling your business, not balancing the books.
4. You Don’t Understand How Your Business is Performing
Financial statements can be confusing if you don’t have a background in accounting or finance. Without a solid understanding of your balance sheet, profit and loss statement, or cash flow statement, it’s hard to know if your business is truly profitable or where your vulnerabilities lie.
5. You Don’t Know Your Cash Position or Runway
If you’re unsure how much cash you have on hand or how long you can continue operating without additional funding, you’re running blind. Understanding your cash flow and runway is critical, especially when it comes to making investment decisions or preparing for growth.
6. You Have Banks or Investors that Need Solid Financials
If you’ve taken on debt or raised money from investors, they expect a certain level of financial transparency and accuracy. If your financial reports aren’t up to par, it can damage your credibility or make it harder to secure future funding.
7. You Need to Create Forecasts or Explore New Opportunities
Whether you’re considering expanding into a new market or need a financial forecast to attract investors, you need solid financials as a starting point. Without a solid foundation, it’s difficult to create accurate forecasts or evaluate growth opportunities.
8. You Lack Guidance on Financial Strategy
Even if you understand the basics of your financials, you may not have the experience to create a financial strategy that supports your long-term goals. Having a financial leader on your team provides the guidance and support you need to navigate complex financial decisions.
9. You’re Worried About Overpaying for a Full-Time Executive
Hiring a full-time CFO can be expensive, especially for an early-stage startup. You might be hesitant to commit to such a large salary when you’re still working to manage your burn rate and maintain cash reserves. The good news is that there are cost-effective alternatives.
The Solution: Fractional CFO vs. a Fractional Team of Accountants
When it comes to hiring financial leadership, you have options. You could hire a fractional CFO, but that often only covers strategic and big-picture guidance. A better solution for many startups is a fractional accounting team—a combination of an accounting associate, controller, and CFO—who can handle both the strategy and the transactional work. Here’s why:
1. Strategic Oversight Without the Full-Time Cost
A fractional CFO focuses on strategy, planning, and long-term financial health. They’ll help you develop financial forecasts, secure funding, and make high-level financial decisions. But if you’re still bogged down by the day-to-day transactional work, that’s where a fractional team can make the difference. A fractional team handles everything from bookkeeping to financial planning at a fraction of the cost of one full-time executive.
2. Transactional and Strategic Support in One Package
Instead of just focusing on big-picture strategy, a fractional accounting team like Resolve Works covers both the financial operations and the strategic guidance. You’ll get someone handling the daily accounting, while also receiving higher-level financial planning and forecasting from the controller and CFO. This gives you complete financial support at every level.
3. Flexibility as You Scale
One of the greatest benefits of a fractional team is the flexibility it offers. As your business grows, the fractional team can scale with you. Whether you need more hands-on support during a busy season or increased strategic guidance for an upcoming fundraising round, the team can adjust to your changing needs.
The Right Financial Leadership for Your Startup
When you start feeling the weight of financial management pulling you away from your core business, it’s time to consider bringing in financial leadership. A fractional team can give you the support you need without the overhead of a full-time hire. With the right financial foundation in place, you’ll have the freedom to focus on growth, knowing your finances are in capable hands.
About Resolve Works
Resolve Works specializes in providing outsourced accounting to serve the unique needs of early to mid-stage startups, and companies running on the Entrepreneurial Operating System (EOS).
We work with fast-growth companies that are committed to the quest for clarity, information, efficiency, and focus. We are energized by visionary organizations that are growing quickly, moving fast, and need a team that can seamlessly step into the accounting seat, making an immediate impact.
