Cloud Costs
For
many companies, depending on size and stage, cloud spend is the second-highest
cost after payroll. Of course, the current slew of cloud wars between the
industry’s best and brightest — Amazon, Google and Microsoft — are helping
the costs to reduce themselves, but this sort of passive maintenance is far
from ideal. By working in conjunction with the Systems team, a
plugged-in finance teammate can reduce cloud costs by another 25
percent (at least).
Business Analyses/Forecasting
There
is no underestimating the power of well-calculated, defensible numbers
displayed on a page. Many CEOs will have a rather good gut sense of paths that
work best for their company —from pricing analyses to company-wide resource
allocations to 5-Year P&L and cash forecasts — but until all relevant
numbers are put on a page, it’s not possible to make a truly informed decision.
A finance person
can help tell a story with well-sliced data and, if necessary, a few
well-explained assumptions. It is difficult to argue with well-calculated
numbers, and there’s no better sense-check for a company’s current state or
trajectory. Of course, anyone could enter a few functions into excel,
pound the table to defend certain assumptions and declare themselves a data
genius.
A
model is only as good as the person building it and the assumptions
layered into it. It’s therefore very important, especially if a CEO
would like to lend any credence to the analyses put before him/her, that
the finance hire be a good one. As helpful as correctly calculated
data can be in critical business decisions, slapdash data with unrealistic
assumptions can be misleading and destructive. Not to mention it can leave the
company’s board unimpressed if unrealistic data — or constantly changing
data — is set before them.
Following
in this vein, and specific to pricing strategies, a product’s story isn’t fully
told until a finance person is given the opportunity to
dig into a pricing/profit analysis. While a business development or
marketing professional should have a good sense of pricing stratagems that work
in the market, a finance person should have a firm understanding of
the various cost drivers that inform the creation and management of a product.
When
running through what-if pricing scenarios, it is this handle on cost drivers
that informs the ever-important margin calculations. While seemingly
straightforward, this gut check is surprisingly often overlooked.
Budgeting
And
now, the fundamental portion of finance professional’s role: budgeting.
Budgets should be put together and conducted with as much granularity as
possible, because such finely detailed data can lead to extremely useful
analyses and quarter-over-quarter comparisons down the road.
This
sort of painful attention to detail is unfortunately exactly the type of
housekeeping that allows for well-informed boards, tidy investor packages and
grounded five-year-plus forecasts — not to mention that it further lends a
level-headed dose of reality to oft-runaway startup spend.
Budgets reek of a decidedly corporate
stink.
If
the correct infrastructure is put into place early on in the
company’s life cycle, budgeting becomes a once-monthly 15-minute nuisance for
anyone outside the finance team, and provides outsized value for
data-driven decisions down the road.
These
are all functions that a finance professional could lend
a startup early on in its trajectory, well before IPO preparations
and before even your first 409a valuation. Further, if hired
correctly, the finance team need not put a damper on a startup’s
uniquely geeky, fast-paced, entrepreneurial culture.
About Author: The author of this blog has a passion for writing and has written many blogs related to trademark registration, Company Registration, Intellectual Property Rights, legal services, LLP Laws, Copyright Registration
No comments:
Post a Comment