You need to handle the books correctly as a CEO. It can be really tempting to get an internal finance person - and yeah, you're going to want a CFO and accountancy when it comes to having a company over a certain size. Assuming you're not building an entire fintech company, in many cases the jobs that you need them to do - everything from building the basics of your payments systems to full-scale future strategy for how your company will fiscally work - can be done part-time and externally. Tax day sucks, as I've written about before, and so it's time to start thinking about how you're handling and spending it. Sadly, starting with just software won't be enough.
It's a decision to make early, as it can lead to issues in the future ranging from painful to company-endangering. "Not investing in accurate financial reporting and analysis is like trying to win a race while running blindfolded," said Raj Jeyakumar, Vice President at Toptal Finance. "It's all too easy to delay investing in finance capabilities until the mistakes have been made." It only takes a quick look at Buffer's transparent discussion of their financing to see that even a company totally divorced from most of what we'd call "finance" - even a social media company has to consider incredibly complex revenue decisions.
I'm for it. I've found that hiring external professionals, especially money minds, is a smart, financially savvy way to get the best experts on board immediately so that I don't have to (as it would also be terribly inefficient) hire a full-time fiscal genius. In a recent survey of major industries and multinational corporations by Deloitte, 30% of respondents planned on increasing their use of outside finance experts.
Interestingly, even Buffer (in their complexity) only has one specific finance person (their Finance Planner makes over $100,000, which gives you an idea of why this all matters). And in the end, it comes down to making your company better. "On a practical, day-to-day level, self-improvement is the value that I believe has made the biggest difference in my life since joining Buffer," said Courtney Seiter at Buffer. "Without a genuine want to improve one's self, it's nearly impossible--or at least really hard--to make real progress on the rest of the values."
However, for those just starting out, self-improvement finance-wise for your company is done best by being willing to take an objective look on everything. Here's how I've found it's helped me.
Specialists Know More. Seriously.
When I first hired my accountant, I got a fairly strong "you're an idiot" for doing my business taxes on TurboTax. It's a simple place to start, but don't split jobs that are best focused on by someone who knows what they're doing to direct your ship. For example, despite your shiny new go-to-market strategy, a pricing expert could make the difference between getting to cash flow positive status, the thing that real businesses do. Simple pricing differences can be the difference between your next launch being a huge success and a huge fiscal success. On a simple level, I found cutting a buck off of the top of my book's cost sold me 5 more copies a week. I never thought of it until a professional told me.
It Raises The Bar On Your Company
The structure of a company, even a small one, is a confusing and exhausting process to do at the same time as actually running it. Having a fiscal strategist work with you (or for you) to handle the structure of equity, compensation and even the way in which you ramp up hiring is an efficiency force multiplier past 5 employees.
Burning Cash Can Actually Be Fuel
According to PwC, 77 percent of CEOs described talent gaps as a significant impediment to company growth and performance. Thinking about how much everything in your business should cost, or even whether you should change direction (moving toward a subscription-based model for example) is a lot harder to do internally than externally. It can also speed up your ability to generate cash - I've banged on about the simple changes that people can make, but on a larger-scale, a financial mind can say "you're paying way too much for people who aren't generating you enough money." Furthermore, someone who you pull in as a deliberately objective and experienced person with a specific goal doesn't need that annoying startup 3-6 month ramp-up.
Objectivity Is Power
I've said it before and I'll say it again, sometimes you need someone to say "no, that's a stupid thing to do." It's a lot harder to listen to someone you've been in the trenches with. For example, if you have three offices, why do you have them? That's a question that's very hard for anyone in any of those offices or, indeed, your own company to answer - you need someone to take a look at everything through clear eyes.
Your Staff Can Learn Something New
Just by the osmosis of being around my lawyer and accountant I've picked up basic habits that have made my life (and by proxy theirs) a lot easier. It's easy for members of your team to get locked into their roles, and thus having a seasoned financier to work with them to look at the bigger company picture could have them think a little bigger than they might be already.
In The End, You'll Get More Done
I'll tell you from a personal perspective that going through the process of having a person who knows what they're doing go through your finance is both invasive and necessary. As a CEO you're likely already making decisions that should be made for you, taking time to do things that someone else can either do better or, sadly, properly. If you're doing a debt raise, you can't do it alone, and having someone sitting around waiting for a financial situation to work on in most startups just isn't necessary. Yet bringing in an objective expert is the way to go; you'll lack the internal bias, you won't be competing with people to hire a full-time CFO or financial specialist with the chops of what the part-time market has. At least I have.