The role of finance teams in start-ups is no longer confined to bookkeeping and number crunching. Instead, they now actively contribute to shaping and implementing the company's strategy.
Let's explore how finance teams can effectively support the strategy and drive success in start-ups.
Understanding the business and its strategy
The first step for finance teams in supporting the strategy is to gain a deep understanding of the business, its mission, and its objectives. This allows the finance team to provide valuable insights, identify potential risks, and suggest financial measures that align with the company's overall strategy.
Participating in strategic discussions
Finance teams should be actively involved in strategic discussions. With their unique perspective on the company's financial health and market dynamics, they can offer valuable inputs that guide strategic decisions. Their financial expertise can help assess the viability of strategic initiatives and suggest ways to optimise returns.
Setting the strategy
In some cases, finance teams may even play a role in setting the strategy. They can guide the company towards financially sound strategic choices, making sure the company's financial sustainability while pursuing its strategic objectives.
Dave Eaton, fractional CFO says:
Of course, the overall goals and strategies will be driven from the founders, but a strong CFO should be challenging those goals, tying them to a finance plan to make sure they are achievable, sensibly planned and resourced. Finance’s role should be the consciousness of the entrepreneurial founders to make sure strategic goals are challenging but planned appropriately.
Aligning financial decisions with strategic goals
Every financial decision should be examined through the lens of the company's strategic goals. Whether it's an investment decision, resource allocation, or risk management, the finance team should make sure these decisions support the strategic objectives.
Using data to drive strategy
Financial data is a wealth of insights. The finance team can use this data to identify trends, pinpoint growth areas, and uncover potential challenges. These insights can inform strategic decisions and help the company stay ahead of the curve. Finance teams are going beyond financial data and also owning, and incorporating, operational data to better understand what’s going on across the business, and why.
Supporting the execution of strategy
Once the strategy is set, the finance team plays a crucial role in its execution. By monitoring financial performance, managing cash flow, owning critical business-wide KPIs and metrics, and maintaining control and governance, they can help drive a successful implementation of the strategy.
Your finance team should have a strong understanding of your business and its strategy in order to provide valuable insights and contribute to important strategic decisions that can help drive your success. By actively participating in strategic discussions and potentially even setting the strategy, finance teams ensure that financial decisions align with the company's overall goals and objectives.
A well-equipped finance team is an invaluable strategic ally for any start-up. By actively supporting strategy, they can contribute significantly to the start-up's success and sustainable growth.