Raising business capital with Virtual CFO services
2 August 2022
Raising money for the growth of your business can feel overwhelming. Where do you start? How will you value your business? Where do you find investors? What do investors look for? Are you prepared? How do you know if you’re prepared?
If this is your first time raising capital then let us assure you, these are questions our accounting and business advisory team get asked all the time. Thankfully, there are experts and services available to you to help you feel confident in this exciting, yet stressful, period of your business.
One type of service that could benefit you greatly throughout this process is Virtual CFO services.
A Virtual CFO (Chief Financial Officer) is a financial expert who will analyse your company's business documents and prepare them for investors. Let’s dive in deeper below.
What are Virtual CFO services?
Virtual CFO services connect you to strategic professionals who manage and evaluate your financial records and helps to ensure they meet your specific business goals.
The reason Virtual CFOs are an excellent option for small and mid-sized businesses is that they deliver their services remotely, meaning they are more affordable than hiring a full-time CFO and the services are customisable, so you only pay for the services you want.
How Virtual CFO services add value when raising capital
Let’s go through some CFO roles and how they may help with valuation and attracting the right investors.
1. Determining the amount of money to raise
You know that you need to raise money, but exactly how much can be tricky to answer. A Virtual CFO can evaluate your business needs and how the money will be used to grow your business, evaluate your current and past business records, your current financial position and bring it all together to create a more accurately estimated figure to aim for.
2. Valuing the business
There are different methods of raising capital but with each method it is essential that you know the value of your business.
Virtual CFO services can not only advise on the most applicable valuation methodbut also assist you in this potentially complicated process. If you plan to raise money through selling company shares then valuation is mandatory, but whichever way you raise your capital, investors will need to know the worth of your business.
3. Impressing your potential investors
First impressions matter when it comes to attracting investors to your business and Virtual CFO services can help you present documents in a way that leaves you looking professional, responsible and to be taken seriously.
For example, investors will want to compare your past and present financial documents efficiently, without errors or need for further explanation.
Meeting investors can be daunting, they are meticulous and require transparency when looking for a business to invest in and working with Virtual CFO services can help provide some peace of mind that you’re going into this meeting with your best foot forward.
4. Gathering relevant data
Data, data, data. The ruler of business valuations. Gathering this data will be key to ensuring you get the most accurate valuation of your business possible. The data needed might include the following:
Financial documents such as balance sheets, income statements, payroll reports, and receipt records.
Transactions documents such as invoices and receipts.
Compliance and regulatory documents such as tax reports.
Business insurance, etc.
Gathering this data in itself is a big task and will require time and effort on your part. Virtual CFO services can help by confirming you have the correct information, statements, and documents needed throughout the valuation process. They also have extensive knowledge in tax reporting which will come in handy when preparing the records ready for presentation.
5. Finding the right investors
Finally, with all your ducks in a row you’re ready to find the right investors. Emphasis on the ‘right’. Not every interested investor is going to be worth presenting your business to and vetting these investors will streamline the process of finding the right ones.
Even if they are not in the vetting process, a Virtual CFO can provide helpful advice on what to consider when choosing the best investor for your business.
6. Timely financial reporting
Congratulations! You’ve raised capital through investors and now it’s time to grow your business. And produce the subsequent financial reports your investors will be looking for.
Although reporting is a small penance to pay, the timeliness and professionalism of these reports can dictate your future relationship with your investors and presenting them in an appealing manner can take added time and experience on your part.
Not only are these reports important for the investors, they are important to analyse the success of your venture and whether the process of raising this capital was in fact beneficial to your growth.
Virtual CFO services are able to prepare reports specific to the investors’ needs and specific to your own business’ financial needs, providing you with the clarity you need to make future business growth decisions.
We cannot underestimate the need for preparation and expertise when raising capital for the growth of your business and although it can be a costly exercise, it doesn’t have to be. Virtual CFO services provide you with the knowledge, experience, and confidence of a full-time CFO with the added benefit of affordability.
Learn more about how Virtual CFO services can benefit your business, or get in touch with one of the Accounting and Business Advisory teams at Findex. We are committed to the success of our clients and understanding their unique business needs.
We are committed to the success of our clients and understanding their unique business needs. Get in touch today.