For many businesses, hiring a financial consultant can feel like overkill. Limited resources, a prioritization of core competencies over back-end financial management, and misconceptions about the value a financial consultant can actually bring to business operations are all common reasons for why organizations hesitate to identify and partner with a financial consultant company.
When it comes to making an in-depth analysis of a company’s profitability, though, financial consultants can make a huge difference in helping businesses become cash flow positive. In many cases, the consultant’s impact extends far beyond basic number crunching and can result in actionable next steps and real growth opportunities. Here are 3 ways financial consultants can help businesses transition from hyper-growth start-ups to cash-flow positive companies.
In order to become cash-flow positive, organizations need both a high-level and granular view of their earnings and expenses. Skilled financial consultants can play outsized roles in developing this picture, particularly when it comes to making accurate projections for revenue, expenses, and cash flow. In the case of opendorse, a business that helps athletes build a following and monetize on social media, a financial consultant company was critical in developing a wide variety of different budget scenarios.
“Our executive team, while having some experience with annual planning and budgeting, couldn’t lead the charge on [developing a 2023 budget] internally,” said Derek Peterson, Senior Vice President of Operations. Hiring an outside financial consulting company helped Opendorse define different scenarios and provide requisite budgets for each.
This approach was particularly important for Opendorse since it operated on a relatively complex business model with many types of clients and stakeholders. Becoming cash-flow positive meant adjusting from a start-up growth mentality to one that could scale on a broader level.
For Peterson, part of this transition inevitably required an improvement in revenue-to-expense ratios. Partnering with financial experts would help his team cut out excessive spending and pursue more lucrative earning strategies. Budgets and forecasts that used Opendorse’s real data to generate month-over-month and year-over-year insights were a critical undertaking that would not have been possible without a dedicated financial consultant.
Another important piece of the transition to positive cash flow is getting stakeholders bought into new strategies and operational processes. One way to accomplish this often surprisingly difficult task is by providing accurate, easy-to-consume financial reports that show past performance, existing optimization opportunities, and future forecasts.
Once a business is out of the start-up phase, it’s important for investors and executives to endorse and contribute to robust, realistic strategies that are likely to increase revenue streams and control spend. In the case of PublicInput, a company that specializes in community engagement solutions, creating high-level reports with the right amount of double-click detail was extremely valuable when presenting to its Board of Directors.
Kevin Fowler, VP of Finance & Operations, said PublicInput’s “ability to grow and expand is contingent on hitting those revenue goals while controlling costs.” Having access to a dedicated financial consultant who played an active part in analyzing data and presenting it in palatable formats to leadership made a huge difference in PublicInput’s move toward positive cash flow.
On the most simplistic level, financial consultants help identify patterns that businesses can turn into further profit opportunities or address as spending concerns. Peterson said that the process of “dissecting and analyzing how our business is performing and distilling that down into easy-to-understand, quick-to-read overviews” was one of the biggest strengths of Opendorse’s partnership with a financial consulting company.
Similarly, the ability of a financial consultant to take on routine tasks — such as monthly reporting — frees up in-house employees for other work. As Fowler explained, “We’re very price sensitive right now,” which means that relationships with third parties needed to make sense from a financial and logistical perspective.
Outsourcing monthly bookkeeping pays for the completion of a necessary procedural task while also outlining opportunities for further growth. Good accounting results in better strategic decisions and less excess spending. With a financial consultant’s help, it really is just that simple.
As a premier CFO leadership and accounting execution firm for emerging companies, Adventum offers clients regular access to highly trained financial and management consultants. Its cost-effective solutions provide a level of agility and flexibility that growing organizations need, particularly as they transition from start-ups to cash-flow-positive companies.
Fowler claims that Adventum offered PublicInput “tremendous value [that] comes from a combination of price and the results of the services they provide.” Adventum’s knowledge and expertise in CFO outsourcing, accounting-as-a-service, and business strategy help its partners scale sustainably to their next level of growth. For more information or to set up a call with Adventum’s professional advisors, contact us here.