Recently, One of our client into F&B sector wanted to expand their business. The business has growth of more than 100 % in a couple of years. The business started with a small capital.The product and services were having all the potential to expand. Casually the second step to the expansion is finding a matured investors to fund bigger facilities, technology, and systems. Unfortunately, the organization was not maintaining any financials from the beginning and despite the fact, many showed interest but nobody turns down due to this reason.
Research shows that one of the reasons why many small businesses remain small and sometimes close shop is not because they don’t have clients or capital to run the business but because they fail to keep their books properly.
Another story which comes to my mind, a few years ago, one of my clients has acquired partnership in a running business. As small level entrepreneurs, they have done the valuation themselves by calculating the assets and liabilities of the organization. During a casual discussion, I requested the documents of the acquisition process. In a revision of this documents, found they have taken into consideration the book value/cost price of all aged Inventories and aged debtors instead of considering its realizable value. A further inquiry on this saved $ 0.5 million to the client.
It is my suggestion to all startups if you are keen on expansions, better hire an outsourced accounting service /CFO services. They can help you in not only financials but can be a great support in your growth journey. The following deliveries you can generally expect
- Day-to-day transactions: ledger entries, bank reconciliations, accounts payable/receivable
- Keeping management, board of directors and investors informed: financials that give a true sense of the business to C-level executives
- Segregation of duties and responsibilities with internal controls, drafting policies and procedures, developing Stand Operating Procedures. Automisation of department processes etc.
- Cost management and reduction
- Implementation of ERP’s
- Create custom dashboards; show meaningful financial and operational KPIs
- Manage payroll, tax reporting
- Negotiate/manage insurance, lease, vendor contracts
- Financial and business modeling/Budgeting
- Profit and loss analyses
- Coordinate audits and valuations
- Sales compensation set-up
- Equity budgeting/capital table projections and management
- Strategy and Business Plan Development
- Feasibility Studies and Financial Assessment
- Due Diligence and Business Valuation
- Business Process Improvement
- Support fundraising and M&A processes
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Blog/Article Credit: Shafeeq Muhammed
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