Leveling Up Finance and Operations to Accelerate Business Growth
“Organizations don’t execute unless the right people, individually and collectively, focus on the right details at the right time.” - Ram Charan
After a summer lull, September is always a busy month with high pressure to hit Q3 targets, while also accelerating Q4 momentum before budgets and hiring plans are set in stone by December.
What continues to be a frequent topic of discussion amongst startup and scaleup founders, leaders, and investors alike is: how should a high growth business set an ambitious yet achievable growth plan?
Before delving into the process behind budgeting and forecasting (in the next article), I want to open this topic by leading with the most important ingredient of any business: its people.
With the right Finance and Operations team, a company’s budget and departments forecasts will naturally be achievable - absorbed and accepted by employees and investors alike.
However, what is often not well understood and overlooked is that SaaS solutions have fundamentally shifted the speed and precision of execution, and by extension a company’s go-to-market strategy and motion. This in turn has directly impacted the role and expectations of today’s high growth Finance and Operations talent.
Whereas pre-Cloud, Finance’s role was predominantly centered on collecting the numbers that assure business compliance with regulation and government requirements; in our digital and remote world, the data collection can be largely automated through tooling and API integrations.
What is much more challenging, especially in a fast changing environment, is ensuring data integrity. This boils down to implementing repeatable and scalable processes around existing and new talent. With data integrity in place, a business can then transform data to derive valuable insights and intelligence to effect better, faster decision-making. This is where the real value of Finance and Operations lies - it’s about the practical, actionable insights to accelerate execution accuracy and velocity.
The tools and systems to store revenue, cost, and cash are distinct and designed with a very different user in mind.
An accounting solution like QuickBooks (founded in 1983) or Xero (2006) cannot predict the future, it can only record the past. In comparison, an Enterprise Resource Planning (“ERP”) system such as NetSuite (1998) is too heavy and slow for a vibrant, fast growing startup or scaleup where often the processes are too immature to produce accurate data inputs. Hence the birth and rise of Cloud-based billing and revenue management solutions like Chargebee (2011) and the proliferation of payment platforms such as Stripe (2009). It is all about getting as close and quickly as possible to the raw customer data, and then surfacing it across the business in a clear and frequent manner.
An accountant is educated and trained very differently from a data scientist, and the same goes for a business/operating partner, banker, consultant, or investor. So why assume one person can wear all the hats attached with go-to-market strategy, funding, integrated planning, reporting, business intelligence, controls and compliance?
Public companies typically have Finance teams of 60-80+ professionals. In an early stage business, the need is no different.
Unfortunately, the Finance department often receives resources far too little (or too late). So they first need to fix the problems resulting from leadership debt that had already begun many months or years earlier. This often takes 1-3 quarters, maybe even longer. Hence the Finance and Operations team in a fast changing environment needs to wear many hats working in an agile (not waterfall) manner.
It is our view at Pegafund that venture-backed businesses require the best talent to deliver quick time-to-impact with a ‘pod team’ of SaaS Finance and Operations experts who can work in tandem to “clean up” organization debt in order to enable revenue visibility, repeatability, scalability sooner. It is the most effective way to build a data-centric organization of specialists who focus on what they do best.
We are currently facing a global talent shortage - ManpowerGroup reports a 15-year high with 7 in 10 companies struggling with hiring. Inflating salaries (correlated to over-funding high risk-reward businesses) does not fix growth challenges constrained by limited time.
So before launching a 4-8 week budgeting process, I urge you first to look at whether you have the right team in place to lead and effect the outcome you will be proud of next year.
If you’re a high growth SaaS scaleup or investor looking to better understand the differences between Head of Finance, Revenue Operations, VP Finance, Modern CFO and how these roles directly impact scaling and funding success, do not hesitate to reach out directly.