Money is frequently tight for startups, and many of them can’t afford to pay a full-time chief financial officer (CFO). However, there’s a solution that will work for many startups called a fractional CFO. Anthony Nitsos joins Startup Savants to discuss fractional CFOs with hosts Annaka and Ethan.
- Startup Savants is a business podcast that tells the stories behind up-and-coming startups.
- Anthony Nitsos joins Startup Savants to discuss fractional CFOs and how they can benefit startups.
- A fractional CFO provides relatively affordable part-time CFO services.
A More Affordable CFO Solution
In many companies, a full-time CFO handles all things financial. However, not every company – particularly startups – can afford to hire one.
“The chief financial officer is generally the person who’s put in charge of all matters pertaining to money within a corporation or a small company,” Anthony Nitsos, founder of Saas Gurus, explained during his interview with Startup Savants. “They’re usually a very seasoned professional that fully understands both accounting and finance. And those are two very different things. They’re pretty much tasked with protecting the assets and increasing the value of the company.”
Fractional CFOs provide all the services of a regular CFO but on a part-time basis. “That’s usually how companies can afford a CFO’s skills without the price tag usually associated with somebody like that because it can be quite expensive,” he said.
Nitsos, whose company provides fractional CFO services, said the process of working with one typically occurs in two phases. “There’s a get-things-set-up-and-cleaned-up phase when we first come in, and then there’s usually an ongoing retainer phase where they’re using us for X number of hours per month,” he said. These “could be on the finance side, could be on the accounting side. But for the CFO piece itself, that’s usually done on a retainer on a monthly basis.”
A Circuitous Road
Nitsos said he originally wanted to be a doctor. However, it turned out that medical school didn’t suit him. “I got into medical school and then realized that this was a great big mistake and that I really did not want to be a doctor as badly as was going to be required to do all of that studying and all the other stuff that’s required to do that,” he said during his interview.
After leaving his medical education behind, he took a job as a logistics and production engineer in a manufacturing plant. This turned out to be more closely related to medicine than he expected. “Manufacturing companies and human bodies are very similar in the way they operate, in the way that they integrate, in the way that things flow through them,” he said. “So, I rapidly evolved into a process engineer, reengineer, troubleshooter, fixer person.”
Nitsos said running SaaS Gurus requires many of the same basic skills. “I have both of those hats [builder and fixer] on almost all the time. A lot of times now, I’m going in and creating things that didn’t exist just as much as I’m going in and fixing things that already exist.”
Advice for Founders
Hiring a fractional CFO for your startup is a wise move because most founders don’t have the necessary skills (let alone the time) to handle the job themselves, Nitsos said.
“Find somebody who’s done it before and have them show you how to do it,” he said. “What YouTube or the DIY sites are really good at is telling you what to do, but not how to actually set up QuickBooks to do it, or how to set up Xero to do it, or how to set it up so that your QuickBooks marries into your financial forecasting spreadsheet so that you’re not having to translate between the two … There is a way that those tech stacks should integrate with each other and talk with each other. And that’s something that we bring.”
At the same time, it’s important to be selective and hire the right fractional CFO for your business. “Make sure that that person has … worked [primarily] in your industry because then they’re going to know what the financial statements should look like. They’re going to know what the investors are expecting. They’re going to know what your board of directors is going to want to see. Those are the things that experience brings.”
Startup Savants Podcast
The Startup Savants podcast is a business podcast created by The Really Useful Information Company (TRUiC). Listeners can hear the stories behind startups, as told by their founders, that are in the midst of growing their companies.
Ethan, an entrepreneur, and Annaka, a branding expert, host the Startup Savants podcast. They bring disparate skills and life experiences to their interviews, providing listeners with important business insights and a holistic perspective on the startup ecosystem.
Hear from a variety of real startup founders from around the globe and with varying backgrounds, making their startup idea a reality. Learn from experts sharing their industry knowledge on venture capital, securing funding, and more on the Startup Savants podcast.
Final Thoughts
In his interview on Startup Savants, Anthony Nitsos discussed the role of CFOs and how they can benefit startups.
You can find the Startup Savants podcast on Apple Podcasts, Spotify, or wherever you listen to podcasts.
