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Utah Business

Our partners at Now CFO chat about how to seamlessly obtain funding.

How to seamlessly obtain funding

When CEOs are preparing to seek funding, it is easy to feel like there is more questions than answers. A CFO can be a key partner in answering those questions—or an expensive asset, offering more confusion than solutions. 79 percent of investors hold the CEO accountable for financial errors. 

A CFO will make sure there are not errors before you walk the initial investor meeting. It is essential that all the proper documentation is in order and easy to understand. With a CFO, your financials will be entirely clean and organized.

Investors are looking for security, and a CFO offers exactly that. CFOs with experience obtaining funding will be able to identify and address any discrepancies that might be a red flag to investors. Plus, their ten plus years of experience will make investors feel like they are making a safe decision. 

CFOs also offer a higher level of expertise when it comes to building your business plan rather than a controller or an accounting manager. A CFO can help you plan where to spend the invested amount to maximize your budget.

The start-up and launch stage of a business is by far the most risky and hectic phase of a business. But it is also the most important to lay a solid foundation for the business. Many start-ups, approximately 90 percent, fail. 

Reasons for this extremely high failure rate of so many startups include money running out, being in the wrong market, a lack of research, bad partnerships, ineffective marketing, and not being an expert in the industry.  

As a startup or small business, it will eventually get to the point where it grows beyond the current means and reaches the next level of success and growth. This can be nearly impossible without some form of outside funding. The early stages of a company typically involve a lot of bootstrapping, which is defined as founding and running a company using only personal finances or operating revenue. 

When it comes time to seek first round funding, it can be quite the intimidating process. To make matters worse, only three percent of startups receive funding. So how do these businesses stand out in those first-round funding meetings?

It starts with detail-oriented due diligence and ends with a good CFO who knows the ins and outs of the funding world. Due diligence is a systematic way to analyze and mitigate risk from a business or investment decision. It involves examining the company’s numbers and comparing those numbers over time and benchmarking them against competitors. It will determine whether a venture capitalist or any other investor will want to invest in your company, making it very important to have due diligence in order.

Due diligence involves business, operational, and legal documents, capitalization tables and term sheets, financial statements and projections, agreements and contracts, and organization and hiring documents. 

Due diligence can take anywhere from two weeks to a month. It is essential to make informed investment decisions and will let the buyer verify the information to assess the value of the business and then determine whether they want to proceed with the funding decision. 

NOW CFOs expert consultants can assist with all due diligence related efforts (buyer and seller) before and during a sale. They can perform the due diligence based upon the specified structured approach or under direction providing investment banks, PE groups, and VC firms with the opportunity to maintain lean acquisitions groups and leverage resources as needed.

During the launch phase, sales are low, but slowly and steadily increasing. Businesses need to focus on marketing to their target consumer segments by advertising their comparative advantages and value propositions. 

As revenue is low and initial startup costs are high, businesses are prone to incur losses in this phase. It is important at this stage to establish a customer base and gain market presence along with tracking and conserving cash flow. 

In order to receive funding successfully, you must have a seamless pitch deck and business plan which will include the following: 

  • Executive Summary 
  • Business Overview
  • Operations Plan
  • Market Analysis
  • Products and Services
  • Sales and Marketing
  • Competitive Analysis
  • Management Team
  • Financial Plan
  • Projections 

Preparing to receive funding is a rigorous process, and it is crucial that an outsourced CFO is there to guide each step of the way. Through the help of one our interim CFO, you can rest easy knowing the financials are in order. Investors are looking for security, which an outsourced CFO can provide by adding a degree of credibility to the company’s financials.  

Chris Badger is a Partner at NOW CFO with experience i strategic management, external financial reporting, board relations, and investor relationships. He holds a BA in Accounting from the University of Utah and an MBA from Keller Graduate School of Business. Chris is also a licensed CPA