I Am A New Business Owner- Will My Business Survive?
If you are a new business owner and you are wondering will my business survive the current economy – you’re like may entrepreneurs in 2022. Read on to learn some important information on the current economy and whether or not your business will survive.
We’re In This Together
I believe many can resonate with the statement above, especially those just starting in the entrepreneurship world. Starting a new business requires time, funding, materials, and most importantly professional help to ease the initial stage processes. Many are experiencing difficulties in sustaining their business in the current economic situation due to high-interest rates and inflation which directly have caused lesser economic activities. There are a few important aspects that any business owner should take into consideration to prepare for future setbacks if any.
Cyclical Vs Non-Cyclical Industries
1-Choosing the right industry is crucial because most of it moves with the economic trend. For example, the construction industry is a cyclical industry that will move in tandem with the market movement. Due to high inflation and rising interest rates, the construction industry is heavily impacted by the rising cost and lower demand for new projects. The non-cyclical industry is impacted much lesser compared to the cyclical industry as the need for this type of services or goods are sought after regardless of the market condition, like staple food.
Economic impact on lifestyle choices
2- Understanding the current lifestyle of the mass, sometimes trends do fade away after time and it is difficult to survive this if a business doesn’t evolve and adapt to the changes. A while ago, healthy meal box was in trend and it’s fading away due to the current economic condition, people are being more conscious of their spending as the inflation rate is on the rise. The size of the business does play a huge role in its sustainability especially when everything is priced at an all-time high compared to 5 years ago. Business finance capability is very important to survive the current price war.
3-Internally an entrepreneur needs to understand the financial status of the company. Having a thorough business process is vital to keep surviving when the situation is not favorable for the profitability of the business. Addressing the entries on the financial statement which might be impacted by the current condition might mitigate the risk of operating losses and allow one to plan accordingly for future business activities like acquiring funding from lending entities or raising private equities. Obtaining professional services like hiring a fractional CFO to revamp the business strategy, perform financial analysis and forecasting and for other crucial areas of the business might save time and generate the desired outcome for the sustainability of the business.
4-Usually, start-ups in a certain industry might get the right resources and assistance from the local state or county during an economic downturn especially entrepreneurs from a specific demographic group. Being on the lookout and updated on the current resources that might guide and assist the business to stay in operation during uncertainties will certainly be useful for small business owners. Subscribing to an insurance plan which safeguards the business operation might also be an important aspect to investigate. Above all, understanding your business and how it can be impacted by little changes by external factors from the beginning is the most important part of swiftly moving beyond the market cycle. As an entrepreneur, our goal is to stay active and generate profitability. Having that in mind, one should look ahead, keep evolving and stay composed when things go sideways. The right mindset and anticipation are vital to gracefully move forward at the desired pace, especially for those who are at the initial stage of a business.
How can we help your business during this time of uncertainty?
In a nutshell, choosing and understanding the industry, adding professional help, comprehensive knowledge of the business financials and analysis, keeping up to date with the latest resources from local state or county and the right mindset are the keys to sustaining a business in a current economic condition. Adapting and evolving with the changes often results in a positive outcome.
For more guidance and professional advice, visit www.startuptandem.com. Startup Tandem provides fractional CFOs services to help entrepreneurs mitigate risks, maintain cash flow, and find capital opportunities during vulnerable times like now. Our prices will adjust to your current business growth and budget.
Before we get started about what you can expect when hiring a fractional CFO, we are going to talk about what a fractional CFO is and what they do. This will allow you to better understand what you can expect. Knowing what a CFO consulting firm may do and how they help a business or company can help you better understand how they can help you. Let us wait no further, what is a fractional CFO?
What is a Fractional CFO and What Do They Do?
In order to understand what a fractional CFO can help you with, you need to understand what they are and what they do. You will notice that a fractional CFO will do the same job as a CFO hired full-time. The only difference is that a fractional CFO will work more part-time than full-time. In general, you will notice that a CFO oversees many items. These items are essential to the functioning of a company. This could include some of the following.
Risk Management Operations
These operations can include many things. One of the most seen things is long-term options and strategies to perform well. There will also be a system in place that will help gauge how the process is working for the company. You will also expect to see that a CFO will take charge of the systems that are there to help keep the assets of a company preserved. This will help ensure that reports are accurate, and it can help prevent any additional surprises in the future.
PRO TIP: Wanna know who are the best startup accountants in Los Angeles? Read this post! You can also read up on how to hire a CFO to give you guidance on the topic!
The Essential Jobs of a Fractional CFO
In this area, we are going to go into depth about some areas where a fractional CFO will excel. These areas are where the CFO is expected to help a company.
Analysis and Reporting
This is where the fractional CFO ensures that all reports are accurate and done in a timely manner. They will also review and help translate items to ensure that the team better understands what was printed.
If you have a good fractional CFO, they will lead you. They will help guide you and provide you with the knowledge to help you make the right decisions within the company. This could include helping you prepare for a hiring situation. This is to ensure that you are hiring only the best candidates.
Having the best fractional CFO on your side will help your business. They are able to help boost the budgeting and forecasting process. They are able to help you make a timeline to ensure you understand where your cash is and where it is going. They are going to help ensure you are managing all resources properly so that little is wasted.
Management of Teams
This is essential to have when hiring a fractional CFO. They will help manage what is going on with finances. However, they will also help ensure that the work is accurate. They will also oversee other relationships with any external financial partners. This could include banks, tax advisors, and even investors.
There are many projects that a fractional CFO can assist a company with. This could include mergers, audits, taxes, and more.
Having a stable financial infrastructure is essential. A fractional CFO can assist a company to help ensure that you have everything you need to build a larger company. This would include people, systems, and more. A CFO will ensure that you can do this safely.
Benefits of a Fractional CFO
A fractional CFO will be an essential part of your team if they are doing their job properly. It is essential that you know the benefits of having a fractional CFO for your business.
High-end CFOs will cost a company an arm and a leg. It is not something that is needed. A fractional CFO does the same job for a fraction of the cost. They will have all the same knowledge that a CFO does as well. It just does not make sense to hire a full-time CFO if the company does not need it.
When hiring a fractional CFO, you are only paying for the services that you need. Plus, they may also help you with other items such as bookkeeping. This will depend on the services that you are hiring from.
Look at Your Needs
A fractional CFO is going to keep your needs in mind. They are there to help you fix or better your situation. Allowing them into your company will allow you to better understand your business and its financials.
Drawbacks of a Fractional CFO
There is only one drawback that can be found. This is because if you rely too much on a fractional CFO, you are going to make it difficult for those in your business to grow. This may eliminate some jobs for people. This means that some people will not have the space to move up in the company in certain departments.
For example, if you hire a fractional CFO and have an accounting team, this means that you would not need any in-house talent for those departments. This could eliminate jobs for the company. In some instances, this may be what they need in order to succeed. However, in some instances, this is not going to be the greatest for people who are looking to move up in the company.
What To Expect When Hiring a Fractional CFO – Cost
You will find that in general, fractional CFOs will charge per hour or per day. This means that the charge each month will be different. It will depend on how much the fractional CFO is needed during the month to assist the business.
For example, you may hire a fractional CFO to help you with a large one-time project that is due. You may not have enough employees to finish it or the expertise to finish it properly and a fractional CFO can assist you. However, you may also choose to hire a fractional CFO on an arrangement so that you can have their advice on a regular basis. This is to help you better your company.
The average cost per month for those who have ongoing relationships with a fractional CFO is a minimum of six thousand dollars a month. In some instances, it may be upwards of twelve thousand dollars a month. If you have a smaller business or company, you can expect to spend around five thousand dollars a month on a fractional CFO.
What To Expect When Hiring a Fractional CFO – Services
A fractional CFO only is a part-time worker. They are not there full-time. Companies will hire a fractional CFO to help a business manage its finances. This could be their daily finances. A business may also need help preparing any type of financial statement or even doing taxes. Some companies may decide to hire a bookkeeper or an accountant for this. These are all the items that a CFO is in charge of. However, a CFO is expensive. Hiring a fractional CFO can eliminate many of the expenses.
A fractional CFO will help with a company’s accounting department. When hiring a fractional CFO, you are hiring a team of professionals that are there to help assist you with all your financial needs and your accounting needs. They are all able to do everything that a CFO can do. However, they are much cheaper and more practical. If you are looking to replace an in-house accounting team for the cheapest price, that is where a fractional CFO can come help.
What To Expect When Hiring a Fractional CFO – Financial Infrastructure
Many small companies rely heavily on their fractional CFO. They are a large and trusted partner in the company. The goal is to ensure that everything goes as planned and that there are no financial surprises. It is essential to have a financial infrastructure that is robust. This will allow the fractional CFO to create different reports. These reports could include forecasts and future items. Below are some items that could be created when financial infrastructure is implemented.
Financial forecasts are more detailed. These forecasts could be short to long-term forecasts. They are going to be more detailed and accurate than ever.
You will also know your KPIs or key performance indicators.
You will also find that fractional CFOs will use efficient systems that are data-driven.
You will be able to see repeat processes and patterns. This will allow you to develop predictions.
You will also have both external and internal reporting.
What To Expect When Hiring a Fractional CFO – Financial Plans
Once a financial infrastructure has been established and is running, this can be implemented. There can be clarity for any financial plan. This allows a company to financially plan for its future and future orders. Having a stable financial infrastructure can allow a fractional CFO to do the following.
Help create growth strategies. This can be for both short and long-term growth.
A fractional CFO can help expand how many employees a company has. They can help ensure that the right people are hired during the interview process. They want to ensure that only the best is working in your company. This allows you to make the most money.
A fractional CFO can help determine how much to market for budgeting.
Having a strong financial infrastructure can help allow a company to offer a generous and motivational compensation plan for employees. This could include stock or even equity.
This can allow a company to potentially invest in more property or equipment for the business.
What To Expect When Hiring a Fractional CFO – Finding the Right Fractional CFO
Finding a fractional CFO that fits your needs can be challenging. That is why we are here to tell you how to find the best company when you are looking to hire a fractional CFO.
The first thing that you need to do is ask questions. You need to make sure that you are asking the right questions to ensure that they are going to be a good fit for your needs. Every business is different, and their expertise may not be what you need. You need to find a fractional CFO that is qualified and has the trust built with past clients. After all, you need to trust the person who will be in charge of your finances. You want to ensure that the CFO that you hire has experience within the industry. You want to see that they have experience with companies in all aspects. From those just starting to those that have been around for sixty years. A well-developed fractional CFO will have helped many companies in various stages of life.
If you want to accomplish something specific within your business, you need to ensure that the fractional CFO has done it before. This means that the fractional CFO has helped another company achieve this goal successfully without any major problems. Look at the results before making final decisions.
Fractional CFO – Who Is The Best Company To Provide This Service
You can contact them for a consultation or take a look at their business on the map below.
Wrapping Up: What To Expect When You Hire A Fractional CFO
Taking the time to have someone on your side that will help you with finances, organizing, and many other daily tasks is essential. This is especially true if you are looking to expand a business or company. Taking the time to get everything in order before you proceed with anything is important. Contacting Startup Tandem will ensure that everything is done properly. This includes accounting and even bookkeeping. From helping a business start its finances to helping a business see how much it will cost to expand, Startup Tandem has you covered.