While the startup culture is booming in India, there’s one more culture that is developing i.e., dedicated startup services and schemes. The government is actively participating in the growth of startups and therefore, has launched various schemes for supporting them. Further, banking organisations are now opening dedicated startup branches in India. Similarly, considering the needs of startups, virtual CFO for startups are gaining prominence. Gone are the days when companies availed of full-time regular CFO services. Virtual CFO services in India are now gaining popularity among startups due to their flexibility and cost effectiveness. If you are still wondering why a startup needs to hire a virtual CFO, then let’s understand the benefits.
Why Do Startups Need to Hire Virtual CFO Services?
Here are some of the prominent reasons why virtual CFOs for startups are gaining prominence in today’s competitive era:
1.Because Statistics Say So
Let’s see some statistics for startups. India has emerged as the 3rd largest startup ecosystem in the world. As per the news report of July 2022 of Times of India, the number of startups in India is 72,993. However, the grass is not all green. As per the news report of Mint, recent studies indicate that there is a 90% failure rate among startups. Major reasons attribute to the inability to understand and gauge the market accurately, lack of preparedness, fluctuating conditions of the market etc.
Therefore, if the startups can take care of these reasons, then the chances of failure can reduce significantly. And that is where the virtual CFO services step in. They help startups plan well, obtain industry knowledge and tackle fluctuating market conditions.
2.VCFOs are Cost Effective
Virtual CFOs are more cost-effective than an in-house CFO. While an in-house CFO is a full-time employee of the company and in a senior executive position, therefore, the charges are often exorbitant. However, in the case of virtual CFOs, startups need to pay only for the services and deliverables provided by virtual CFOs. Hence, the virtual CFO services are cost-effective as compared to the in-house CFOs.
3.Focus is the Key
Most founders at an early stage are stuck in operations, management as well as compliance. However, it is important that founders focus on growing and stabilising the business. In the ambit to manage everything, they miss out on their core functions and responsibilities. Hiring a virtual CFO for startup can help manage all the administrative tasks while also assisting in devising proper strategies for growth. This not only provides room for the founders to focus on their core tasks but also helps them craft proper strategies.
4.Best Alternative to Hiring
Finding the right talent for CFO, core finance and administrative roles in your business can be difficult. Further, most startups do not have the necessary resources to interview and staff such positions. Bringing in a virtual CFO is a great alternative to the tedious hiring process. While an in-house CFO is a single person, virtual CFOs are a team. This provides you with the benefits of the expertise and experience of various individuals that are a part of the team.
5.Solution to Bookkeeping Issues
Your books show the actual performance of your business. Therefore, it is important that you accurately record transactions in your books and keep them reconciled. One may face various issues in bookkeeping including delayed recording of transactions, errors and omissions, unauthorised alteration etc. Virtual CFO services for startups can help in accounting and bookkeeping including performing the tedious tasks of reconciliation and removing errors.
6.Fundraising Assistance
This is what most startups struggle with. Startups always have two options i.e., bootstrapping or fundraising. Bootstrapping involves using the profits generated from the business to fund the business’s growth. However, it can lead to slower growth and expansion. Another method is to go for fundraising. This infuses a huge amount of capital into the business that can be used for growth and expansion at a faster pace. Further, entrepreneurs are often short of capital at the initial stage especially in case of a new innovation or technology.
In any case, it is important that the startups are connected with potential investors to pitch their ideas and raise funds. This is where the best virtual CFO services in India can assist the startups. With the strong network built over the years and providing fundraising services to countless startups, virtual CFOs can help startups connect with a range of venture capitalists and angel investors to raise funds.
7.Improving Process Efficiencies
Organisation’s growth may be affected if the startups have inefficient processes in place. If the business processes are efficient, then the operations can be streamlined to channelize growth. Most startups follow the reactive method whereby they improve after every mistake. However, there’s a simpler way as well. One can go for an expert who can help establish efficient business processes from the very start. This helps save time and resources for every mistake made by the startup. Virtual CFOs have experience with multiple industries and know the ways different organisations work. Therefore, they can be helpful in establishing and designing efficient processes.
Should You Hire a Virtual CFO?
Above were some of the prominent reasons virtual CFO for small business and startups are becoming popular. Virtual CFO pricing is very cost-efficient and flexible, virtual CFO services in India are gaining momentum as they are able to cater to the needs of mid and small-size businesses. Further, the sooner a startup hires a virtual CFO, the more informed decisions it can make and the faster it can grow. If you are looking for one of the best virtual CFO companies in India, feel free to contact your eAuditor Office
