KPI analysis and reporting. Early on, the CFO is often the owner of any reporting and key performance indicators (KPIs). You can take this opportunity to build a business that uses data to drive decisions and are actionable. You can partner with the appropriate groups like Product, Sales, and Marketing to determine what they are. Additionally, you can help or own the systems that store or measure the metrics. Establishing an effective business intelligence tool early on can absolutely help you as you scale, to ensure that the data you are using for reporting and decision making is consistent and timely. You want people closest to the challenge or problem making the decisions and creating effective KPIs and systems, since all of these are an important part of making sure your company can do this as you scale.
Company communication. The startup CFO will be the person to communicate financials and other corporate numbers to the company. Often you will want to provide useful sound bites and the implications of metrics/financials that others can understand, not just rattle off numbers. You will also be the key person who keeps the executive team and other leaders informed on basic financials, burn rate, and investment mindset; you will educate the rest of the company on the pieces of financials that are important; and ensure no surprises for the Board/CEO, especially on burn rate and cash runway. In general, it is a good idea to work on your public speaking skills. Some basic things I learned early on was the importance of telling a story with the numbers and taking your time while speaking. Everyone will have an important one or two things to keep in mind that are specific to them. For me, it was to slow down and remember to pause at the right points and to take a breath!
There are a number of other functions a startup CFO may manage or partner with the CEO. Some of the more common ones include:
Corporate systems. Early on, it is important to establish baseline systems for all corporate functions. This includes creating centralized management of corporate systems, including license management, agreement negotiation, and data sources of truth. A helpful exercise is to maintain system flow chart/map and usage metrics and eventually establish and manage the Business Systems team.
Corporate IT. The key here is bringing your organization and management skills to the function. Some of the things you will want to do is establish basic purchasing guidelines, depreciation guidelines, inventory management, back‐office email, shared drives, calendar, and other systems. And you will want to properly resource the IT help desk, build IT documentation, and guidelines including security.
Facilities and real estate. For the startup this is really managing leases, the facilities team, office space, and conference room systems. Some other helpful things to create early on include the office space budget; remote work management, local real estate lawyers (I would have a different law firm for each country) and local rules, and multinational support.
Human Resources. For many companies the HR function will report directly to the CEO but for some startups the only HR needs are operational. In that scenario you will again be called on for your operational expertise and will partner to help build the HR systems, onboarding processes and basic payroll operations, and to establish health care and other benefits. Often the people and benefit costs are by far the biggest expense for a startup, so it is important to understand all of the pieces. There are also a lot of different regulations by jurisdiction, so make sure to track state business registrations and compliance filings.
Chapter 18 High Impact Areas for the Startup CFO as Partner
As a startup CFO, there are several opportunities to engage with high‐impact functions that will add value immediately and set your company up with a foundation to scale quickly. A key area to focus on first is revenue operations. Regardless of whether or not revenue operations reports up into the CFO function, the CFO role will be critical in building and scaling the function. The revenue operations function within the finance team and this role is typically responsible for all of the less glamorous items like establishing processes, systems, and watching over the data. Yes, it's head's down most of the time, but the impact is significant, especially as you scale, develop more accounts, hire more sales reps, work with channel partners, and expand geographically.
The core mission of the revenue operations team is to help leverage the salesforce by removing friction in the sales process and providing the accurate and trusted data when the team needs it in order to make great decisions. In a startup you're going to have friction, most likely from misalignment between Sales and other functions, especially Product, Marketing, and Finance. It can be healthy to have some friction, or it could end up killing you, but the startup CFO has a unique view on how all of these teams can work together. Your key role is not to referee debates or choose sides, but to ensure that data and systems are available to everyone so at least people are looking at the same data sources.
For example, take the common scenario where the marketing team believes they are delivering enough leads to the company but the sales team keeps asking for more leads. This is the type of situation that is ripe for escalated friction, and it's a great opportunity for revenue operations to reduce that friction. When this happened in the past to a revenue operations team I was managing, we were able to show that although the marketing team was delivering a lot of leads, the sales teams were ignoring them because they didn't think they were worth pursuing, frustrating Marketing. Once we dug into the data we saw that now, and in the past, many of these leads were not in regions where our product would work. And there were also a lot of leads that should have had follow‐up but were ignored. So, the sales ops team built some simple qualification automation around the region of each lead and then Sales and Marketing were able to look at the same data and align on the quality of the leads. Without access to the same data, Sales and Marketing would not be able to understand the bigger picture, would not align, and that friction would continue and maybe cause problems further down the road for the entire company.
A second high‐impact area where the startup CFO can make a big impact at the get‐go is with the customer relationship management (CRM) system. The CRM setup is critically important as it will be the source of truth for most of, if not all of, your customer data. It will be the platform that integrates with a lot of the other systems as you scale, especially your product environment and financial systems. These systems can get expensive and complicated very quickly, so as a startup it is a good idea to focus on simplicity and add complexity only when it is worth it. Early on you will want to map out your interest to order workflow (discussed below in detail) and identify each important data entry. It's important that these data entries are consistent with single sources of truth that eliminate duplication, encourage automation, and allow for scaling as you grow your business. The most important things to focus on early are customer/prospect names (that they are singular and consistent), opportunity/deal process and naming, and pipeline philosophy. Although it is important to be fast and scrappy while scaling a startup, putting a little extra thought and discipline into your CRM setup will be worth it.
Early on, working with the Head of Sales (and sometimes the Head of People) on commission plan design is a way for the CFO to be a huge value‐add partner. Although there are a lot of approaches to designing commission plans, effective ones, at least for software, share a few key things.
First, there has to be alignment between the CFO and Head of Sales because you want their perspective and buy‐in on the dynamics of the commission plan. The commission plan is at its heart a tool to motivate and focus the sales team, so you need to be aligned with your Head of Sales. As CFO, you wouldn't dictate outbound strategy, so don't try to dictate compensation strategy. Your role as the CFO is to know if the company can afford it, to provide metrics if it is working, ensure it is reasonable to administer and fair to all parties and generally competitive in the market. There are a handful of pieces of the plan that will crop up year after year, like commission rates at different tiers, implications of beating targets, channel conflict, and you'll need an ally dealing with the many commission one‐offs that arise. You don't