Part-time CFOs For Hire: A New Venture Connection
CFO -
Seasoned liaisons available. For any startup board seeking money,
expertise, and a firm hand at the helm, a new idea has appealing
momentum: Enlist the services of one of a growing corps of part-time
CFO consultants. Most offer at least 20 years of financial and
accounting experience. They have worked their way up the ladder,
rising through the ranks, experiencing mergers and IPOs, losing
jobs, and watching industries rise and fall. They are the seasoned
professionals who allow the bright-eyed innovators to run a company
while they act as a liaison between their entrepreneurial boss and
additional funding. Business has never been better for part-time CFO
consultants, thanks to the tidal wave of venture capital ($35.6
billion in 1999), pouring into startup firms.
An important reality check. The part-time CFO provides much needed
financial skills such as drafting and implementing business models
and cash flow forecasts, creating budgets, analyzing contracts, and
installing accounting systems. One consultant helped a 40-person
company switch from QuickBooks to a global payment network.
Occasionally they get involved in the minutia of financial
management, such as A/P processing. They provide links to bankers,
insurance companies, lawyers, benefit consultants, and—most
importantly—sources of additional funding. One consultant states
that his most important function is to act as a reality check in
what is often a very heady environment. Another realizes that he
brings poise and confidence to meetings with prospective investors.
A third feels that his most important contribution is pinpointing
soft spots in a business model, critically assessing the financial
plan, and challenging assumptions that do not make sense.
Ratcheting up for an IPO. A closely held business can operate on a
simple business model, which may include the occasional services of
a CPA to handle the financial matters. Adding venture money to the
capital mix requires a more sophisticated level of financial
controls. CFO consultants have built up a thick file of contacts
over the years, including venture capital firms looking for their
next score. Part-time CFOs know what the venture community wants to
hear and can pitch the company accordingly. For the next big step,
the IPO, the availability of a seasoned veteran is critical. Many
new companies are getting ready for IPOs without a CFO on their
payroll, and many entrepreneurs have no experience with the
financial community. Frequently the part-time CFO will be the only
manager onboard with IPO experience.
Part-timers build their own portfolios. Many of the part-time CFOs
operate independently, working with a portfolio of six to eight
companies, much the way a venture capitalist does. They may spend a
day or two at each company. One popular part-time CFO receives 10 to
20 new consulting opportunities each week. Some have formed
companies, employing as many as 100 consultants and staff to meet
clients’ needs. Consultants earn between $125 and $275 per hour.
Increasingly, however, they are beginning to offset 10% to 20% of
their fees with stock options. To date, no one has become a dot.com
millionaire, but it is possible to accumulate several thousand
shares while working a year with a company.
Start Me Up, by George Donnelly. CFO, June 2000. Pgs. 77-84. CFO
Publishing, 253 Summer Street, Boston, MA 02210.
CFO Enterprise, LLC
Provides Part Time, Interim, and Project CFO services for your business!
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