Three Steps Startup CFOs Need to Take to Help Their Company Grow

When businesses enter a hypergrowth phase, CFOs have to be as much “Chief Growth Officers” as they are “Chief Financial Officers.” Gone are the days when the CFO’s sole focus was improving cost efficiency through data driven results and cutting costs. Financial solvency is obviously essential, but in the past CFOs have been like the parent you don’t want to ask because you know they will say ‘no.’ Today, CFOs need to be at the forefront of building agility and driving the kind of change that will help the business compete and succeed in the future. 

In a fast-growth environment, speed and direction are essential for the long-term success of a business. However, financial reporting tunnel vision can cause CFOs to hit the brakes on new avenues of growth and turn a blind eye to innovative business changes. The pandemic has brought to light the importance of accepting change and being ahead of the curve, causing an evolution to how businesses run. With these changes, CFOs now have to operate with a different mindset and embrace the pivotal role they play in driving hypergrowth.

Here are three steps a startup CFO should take to support business growth: 

1. See unpredictability as opportunity
   As your company grows, the one thing you can – and should – expect is the unexpected.   For example, when the pandemic hit, it threw a sudden wrench into how every business operated. Yet companies, like Zoom, that were able to quickly react and pivot saw positive outcomes. When work suddenly became remote, Zoom leveraged and expanded their capabilities to turn the pandemic into a business opportunity, driving a 33x increase in profits.

   Companies that truly embraced change and were willing to take risks and to innovate not only survived the lockdowns, but many came out with entirely new business models; that now have offerings that will have a long-term impact. From retail stores that began offering subscription services to deliver items directly to their customer’s doors; to storage companies that capitalized on the number of physical offices that temporarily closed down and needed a place to put the office furniture, highlights how the impact of the pandemic will have ripples for years to come.

   These business changes are not always associated with a CFO, but the pandemic also changed the role of C-suite, increasing flexibility and often expanding the role to be more strategic. CFOs became digital transformation leaders, making important decisions on upgrading systems and tools to adapt to changing business needs and models, all while keeping track of spending and revenue in real time. CFOs had to be agile and open to change and these enhanced expectations will now be the new normal. The big takeaway: Always be ready for and unafraid of change.

2. Focus on strategy over compliance
   As a CFO, it’s easy to spend the bulk of your time focused on accounting, taxes, financial reporting, internal controls, budgeting and risk management. These things are important, but they are the table stakes of finance – and don’t fan the flames of hypergrowth. Reported by McKinsey, CFO’s should take a bigger role in driving enterprise-wide transformation, however less than half of CFOs have led those efforts.

   Thus, I suggest that  CFOs should only spend the minority of their time managing finance and compliance functions and the majority of their time focused on creating the future direction of the business, influencing operating decisions and influencing the messaging to the market and investors.

   The modern CFO now has tools and applications that allow them to monitor the influence of growth initiatives in real-time and make adjustments accordingly; thus playing a critical role in establishing the future direction of the business.With this evolution towards being a “Chief Growth Officer,” CFOs are now playing an integral role  in conversations such as capital allocation and investment in technology. The CFO’s input is far more valuable in these strategic areas, than merely making sure that all of the proverbial ‘i’s are dotted and ‘t’s are crossed – there are platforms, applications and even consultants that can help with these tasks. The new CFO should be more focused on championing and supporting change.

3. Prepare for the financial complexities that come with growth
   As your business grows, your finance workflows become more complex. Before you know it, your team is balancing accounting, financial planning, managing the revenue cycle, ensuring tax compliance and meeting regulatory requirements. All of these moving parts are then stacked on your plate, leaving you with little time to manage. This is why it is important to build the finance team for growth rather than in response to it. Practically, this means investing in technologies that can effectively scale with your business.

   Keeping technology up to date and evaluating what’s important for your team can be difficult due to its unpredictability. One minute your current system works just fine, and the next you are struggling to manage unprocessed payments, stop revenue leaks and locate a reliable source of accurate data that will inform your strategic decisions. The right tools will not only save you time that you can invest in making strategic decisions, like branching out into new markets and trying out different pricing models, it will also give you the data to make those decisions with confidence.

As the CFO, you don’t just have to be the ‘no’ person who is constantly running numbers. The transformation of the role of CFO, and finance more generally, means you now have the ability to lead an enterprise-wide alignment, innovate, and inspire by following the steps above to maximize your impact on growth as your company scales.

Written by Mike Beach.