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.
Finance Capacity
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.
Local Resources
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.
If you’re like many startup owners and entrepreneurs who ask, “When is a good time to hire a CFO?” this post will explain everything you need to know on the topic. Read along as we discover the benefits of hiring a CFO sooner rather than later.
You can also watch our video below as the founder of Startup Tandem discusses some basics related to the topic!
Do I REALLY Need To Hire A CFO Right Now??
If you’re wondering when is a good time to hire a CFO, this post will walk you through everything on the subject. So maybe you recently quit your job to start a business. Or maybe you are a business owner who’s been doing everything on your own. This article will explain when to hire a CFO and the benefits in doing so!
PRO TIP: Once you decide the time is right to hire a chief financial officer, you’re going to wonder how to find one that is the best fit for your company. You can read this blog post to learn how to hire a CFO too!
when should I hire a CFO?
Managing Startup Finances Can Be Super Stressful!
Dealing with the finances of your business can be a major source of anxiety for small businesses and those who are just starting out. However, while managing your finances alone might be an easy thing to do within the first years of your business, it can quickly spiral out of control and leave you with a headache. In order to avoid this, you need a CFO, but when should you hire one?
PRO TIP: Read this amazing article to learn how much does a CPA cost? We know it will be super helpful!
Hiring A CFO Right Away Is A Great Decision!
You should hire a CFO as soon as your business allows, which for most small startups is whenever you have raised around 500K through fundraising. This is a good amount that just isn’t manageable for you to handle alone, and since you are already going to be attracting investors at this point, a CFO is going to be able to help you handle everything.
Outsourced CFO
When Revenue Increases
If your revenue increases to over a million dollars, then you also need to invest some of that money into a CFO for yourself. You will need to not just take in this cash with your business, but also be able to manage it and ensure that you can hit your business milestones and also make sure that you are working within a strong financial model.
Additionally, while bringing on new clients can be a very lucrative thing for small businesses, sometimes they don’t know exactly how much it will cost to work with them full time. If your service costs money on your end, then a CFO will be able to see how much it costs every time you add a new client to your network. Then they can help you balance the books and possibly charge more in order to make up for the lost cost.
Scaling Will Be Easier
Having a CFO will also help you as your business scales up, because you will need to examine where your business is going and how you can ensure your business can handle the rapid growth you are going to put it through. Since a CFO is so important, and will help you in nearly every single stage of your business, then it might help you to know exactly what a CFO is.
Some Basics About Hiring A CFO For Your Startup
What Is A CFO?
A Chief Financial Officer is the person who is in charge of the money and fiscal side of your business. They work with your existing accounting and finance team (or build one if your business doesn’t have one), focuses on the revenue and expenses of your business, works to get outside funding, and is the primary point of communication with banks, your board of directors, and you as the CEO of your company.
CFO’s are the experts in all things money, and you will need to hire one once your business grows to a level of income that can’t be handled alone. Having an expert on your side will mean that you will be able to avoid any problems that can occur as you are growing your business, and they will be your sounding board when it comes to anything involving money.
While things like fundraising and marketing and growing your business might seem like easy boxes to check off for a budding entrepreneur, they can come with questions and pitfalls that most business owners just don’t know about. Thankfully, your CFO will have that knowledge and will make sure to ask you those questions. That way, everyone will be able to watch the company scale financially, without experiencing any problems.
PRO TIP: Read this article to learn how to choose accounting services for your small business. You can also read this post about hiring a part-time CFO and how to go about doing so! Both will be very informative and helpful.
When Should You Avoid Hiring A CFO?
Thankfully, there aren’t too many situations where going without a CFO is a good idea for a startup. Hiring an expert full time for your team can be very expensive, so as long as you can pay that price in your business, then you need to hire a CFO.
They will be an integral cornerstone of your business, and with them, on your side you will see massive growth! As long as you meet the above revenue guidelines and have watched your business grow in scale, a CFO is someone that you should hire and consult with right away. You will not regret hiring this expert in finance, and by working with them you will be able to take your business to even bigger heights!
when to hire a CFO
Conclusion: When Is A Good Time To Hire A CFO?
The bottom line is that hiring a CFO is a good decision if you care about the financial health of your business, want to scale up successfully and take your business seriously. A CFO, like any other position, is needed for many of the reasons we’ve addressed previously.
Companies such as Startup Tandem offer outsourced CFO solutions for startups and small businesses in a variety of industries. We have locations in Delaware and Santa Monica, California and help businesses all over the country with a variety of services. Learn more about Startup Tandem and the Tandem Culture and give them a call for a free quote on services.
We hope you have a better understanding of when is a good time to hire a CFO and wish you all the best!
