12 November, 2024 5 Minutes Read
Yes, it is okay to invest in startups, even if you are new to the world of venture capital. Cash flow is a common and probably the biggest problem for a startup to stay afloat. Yes, business loans are there but sometimes, the financial picture of the organization is not promising enough to qualify you for a business loan. In such scenarios, venture capital or VC can offer you the needed funding. Venture Capital is secure as the investors always look for long-term partnerships. So, they will always opt for financial terms that are profitable for the business. In addition, you will need to sell a certain amount of equity to the VC investors. So, they will offer you insights and mentoring in your business operations. You can argue that it is like compromising absolute control over the business. However, from VC investors, you will get an objective insight into the financial landscape of your business. Also, they will help you remain profitable in the long run. Furthermore, the process from contacting a VC investor to sealing the financial deal takes around six to nine months. In many cases, it can prolong up to several years. So, before a VC firm seals the deal, it will get enough time to decide whether it will remain on board for funding or leave the scenario. Invest In Startup: What Is Venture Capital? Venture Capital, or VC is a popular funding method to invest in startups. In return for the fund, you will offer a certain percentage of equity to the investor. Usually, the equity offered to an investor is between 20 to 50%. Along with funds, a venture capitalist will also offer mentorship, specialized talents, and other benefits to a startup. Specialized talents and mentorship can streamline the operations of a startup and these can help in the further expansion of the business. Having said that, when you invest in startups as a venture capitalist (also called a capitalist), or you take venture capital funds for your startup, you become subject to certain risk factors. The capitalist has the risk of losing their money if the startup fails. Similarly, as the owner of the startup, you will need to make repayments in the form of equity, and you will have to consider their opinions on the business operations. When capitalists invest in startups, you can expect three types of funding, and they are pre-seed funding, seed funding, and early-stage funding. Type of Venture Capital Suitable Stage to Invest In Startups Pre-Seed FundingAt this stage, the business is yet to finalize its ideas. Seed FundingAt this stage, the startup is ready to sell its products and services.Early Stage Funding This is suitable for the growing stage of the business. As the capitalist notices measurable growth in the business, they are willing to put in more funds for expansion. Okay Magazine Speaks Before asking a capitalist to invest in startups in 2024, you must note that 2023 has not been a promising year for venture capital. The VC Market achieved the lowest numbers in the last four years, recording a 35% year-over-year reduction from the already decreasing VC levels of 2022. So, assess the risks well and consult a financial expert for better alternatives like bootstrapping, crowdfunding, business credit cards, business loans, etc. Know The Pros Of Venture Capital Before You Invest In Startups 👍 Venture Capital is undoubtedly a secure funding method for startups. It also helps a startup business to grow its network. Let’s discuss the benefits of getting a venture capitalist to invest in startups. 1. Secure Funding With Venture Capital, you don’t need to make monthly repayments of principal and interest like bank loans. The equity you give to the capitalist is your repayment for the fund you have received. So, if your startup does well, you don’t have to worry about the repayment. Even if the startup is not profitable anymore, the capitalist can sell their shares and follow the exit strategy to get rid of the situation. 2. No Need For Funds And Assets Getting a capitalist to invest in startups is the easiest at the early stage level. Your products or services are already out in the market. Further, at this stage, you have already managed to show certain growth. Nevertheless, you will also find capitalists willing to invest in startups that are brand new (pre-seed funding). It does not matter in what stage of business you are. You can get a venture capitalist to invest in your business without funds or assets. 3. Getting Associated With Specialized Talents As a startup owner, you may not have the talents or teams to streamline the business. However, a capitalist can use their networking to get connected to specialized talents. In a similar way, they can help in the expansion of your business. Furthermore, with a certain percentage of equity, the capitalist will also offer you mentoring, which is like a lot of insight and the biggest eye-opener for a startup business. Okay Maganize Speaks Overall, Venture Capital has broken the myth that large companies always have the advantage of better resources than startups. Venture Capital has come a long way, and over time, it has become efficient enough to meet the funding needs of a startup and back it up with enough networking, mentoring, and talent. So, when you have a capitalist to invest in startups, you just need to crack the operations and distributions. Know The Cons Of Venture Capital Before You Invest In Startups 👎 Despite having many benefits, getting venture capitalists to invest in startups can be challenging. The primary challenge is to get access to Venture Capital funds, considering so many startups are up for it. 322,000 new businesses were formed in the USA in the fourth quarter of 2023. So, to get a capitalist to invest in startups, you need to have profitable and innovative business ideas. Further, you need to have the preparations to operate in the long run. However, with Venture Capital, you also tend to lose your control and equity. Giving Equity To The Stakeholder Giving equity to the investor is a profitable form when it comes to repaying your investor. However, giving around 20-50% equity to them is also a disadvantage as you lose absolute control over the management and operations of your company. Studies show that when a VC uses its exit strategy, they are likely to own half of its business. Also, when they sell their shares at the time of exit, for you, it becomes like beginning from scratch. Having said that, it is still okay to have VCs invest in startups, as the 2024 National Venture Capital Association (NVCA) data says that by the end of 2023, the USA had 3,417 VC firms, and they managed to seal 13,608 deals worth of $170.6 billion. Also read Is It Okay to Use Makeup to Look Younger? Is It Okay To Take Out Business Loans For Startups? Know The Pros And Cons Of Startup Business Loans. Is It Okay To Hire Taxing Company That Outsources For Startups? Managing Your Finances More Effectively.
12 November, 2024 6 Minutes Read
Yes, it is OKAY to hire interim CFO for startups if you are looking for rapid financial growth for your organization. You may not need an interim CFO right when you kickstart your journey. However, you will definitely hire one as your business grows and you have clear goals set. A CFO will also play a crucial role in executing your ambitious moves. A CFO will build a financial model of your business, analyze the transactions, create a budget and make forecasts about the financial landscape. Furthermore, a CFO will assess the risks and devise strategies to mitigate those risks. Overall, in startups, a CFO will promote a “culture of security” by building and managing an agile infrastructure. Moreover, they will have a healthy growth orientation and the ability to depict the best financial stories with the numbers whenever they need to communicate with the CEO, investors, and other stakeholders. “There's no question over the last year, this new wave of technologies has had an impact on CFO decision-making. CFOs are really working to get their arms around all of it and we've seen this not only through our survey but client interactions. If you think about the CFO’s role in the last five to 10 years, more and more responsibility has been put on their plate. They need to grasp and understand these new technologies because they are ultimately the chief allocator of capital in these organizations. The CFO is in a position where they have to make choices and articulate their rationale to the CEO and the board as to how they arrived at their recommendations.”Sandy Cockrell, Former Global Leader of the CFO Program of Deloitte Do you want to know more about the benefits of hiring an interim CFO for your startup and when you need one? Let’s take a deep dive! THIS Is Why It Is OKAY To Hire Interim CFO For Startups 👍 An interim CFO steps into the shoes of your in-house CFO who is about to leave or has left your company. Further, an interim CFO works for a defined period in an organization. They will offer services for a span of three months, or six months or so and maintain continuity until the next permanent CFO is hired. But why do startups prefer interim CFOs over permanent positions? Let’s decode the advantages. 1. Specialized Services Best For Startup Dynamics An interim CFO will be specialized in managing the typical scenarios and challenges in a startup. Thus, they will guide you through various phases of your company and toward achieving the financial goal of your business. Moreover, they will be your voice in the fundraising rounds and the following processes. Mergers and Acquisitions IPO Preparation International Expansion Above all, they will assist rapid upscaling and downscaling of your business, navigating uncertainties and optimizing growth opportunities. Thus, your startup will remain profitable, seated on solid financial ground, and at the same time, steer toward growth. 2. Cost Efficiency You get high-caliber leadership in the form of an interim CFO for your startup. The CFO will be the guiding force in your current capital and growth plans. However, the engagement will be temporary. So, you will not have to worry about the salaries, quities and overhead costs. You will only have to pay the consultation fees. Thus, hiring an interim CFO is ideal for optimizing the limited resources available to a startup business. 3. Objective Representation Of The Organization’s Financial Scenario When you hire interim CFO for startups, you expect an objective viewpoint about the financial health of your organization. So, identifying irregularities in the following areas becomes easier with an interim CFO. Budgeting Cashflow Records Past client deals and transactions Financial control By resolving the said irregularities, an interim CFO helps a startup achieve its short-term and long-term financial goals. Furthermore, they improve decision-making solely based on data. However, being data-driven does not mean that they don’t analyze the market or potential risks. THIS Is When It Is OKAY To Hire Interim CFO For Startups 👍 You will have to bear $440,000 on average as you hire a full-time CFO for startups. However, an interim CFO will only charge you a fraction of this amount, and their role will evolve at the growth stage of your company. To be more specific, it is common to hire interim CFO for startups when the organizations are in a transition phase. Startups also need an interim CFO if they are going for a new round of fundraising. If you are not willing to get an interim CFO onboard, you can also outsource the responsibilities to a fractional CFO with close monitoring. Nevertheless, these are the scenarios when you need to hire interim CFO for startups. 1. When A Startup Prepares For Fundraising A fundraiser is the most common reason to hire interim CFO for startups. As I have said, the CFO will portray the right financial picture of the organization through numbers. That’s why a CFO is also a good storyteller! Furthermore, a CFO will participate in the fundraising rounds. They will even advise you on the capitalization structures and the process of fundraising through venture capital and other methods like business credit cards, business loans, crowdfunding, etc. 2. When There Is A Need To Manage Ad-Hoc Projects You can hire interim CFO for startups to manage ad-hoc projects like financial forecasts. They can function as additional insight into the financial scenario by double-checking the numbers. Ad-hoc projects are more difficult than they seem, as they demand immediate attention. Also, there needs to be clear planning for the completion of the project within the set timeline. An interim CFO can build an agile and dynamic infrastructure, create a WBS or work breakdown structure and do resource allocation to ensure timely completion of the ad-hoc projects. 3. When You Need A Strategic Direction In the USA, a startup business has an average shelf-life of five years. So, it’s clear that many startups struggle to remain profitable in the long run. An interim CFO can be the savior in this scenario. They can offer you a strategic direction, including the most common “cost-cutting” measure to maintain profitability. Strategic planning also involves developing timelines and milestones and documenting all the decisions made regarding the same. Further, some crucial factors in strategic assessments by a CFO are: Future risk assessment Resource allocation to maximize returns Communicating the financial scenario of the company to the Board and other stakeholders Modeling, forecasting, and transitioning the business, including mergers and acquisitions Bringing innovation and experimentation to ensure a long-term future for the organization Along with these scenarios, you will also need to hire interim CFO for startups when your existing accounting system is not up to the mark or the financial operations lack clarity. Moreover, if your in-house CFO leaves suddenly, an interim CFO can easily fit into their shoes. THESE Are The Drawbacks Of Hiring An Interim CFO For Startups 👎 You can face certain challenges as you hire interim CFO for startups, and the biggest challenge will probably come in the form of integration. Knowledge transfer is another hiccup in the process of getting an interim CFO board and having them fulfill their designated roles. Integration Challenges When You Hire Interim CFO For Startups An interim CFO may need some time to get integrated into the culture and system of the startup. Furthermore, they are well aware of the limited span they are going to spend in the company. Both these factors impact their expertise, and they may not be as effective as expected. Knowledge Transfer Gap When You Hire Interim CFO For Startups You cannot deny the fact that an interim CFO is a stop-gap, and their tenure will last until you have found someone permanent for the position. So, knowledge transfer becomes critical when the interim CFO takes charge and, when they leave, passing all the responsibilities to the new CFO. During both these processes, the interim CFO and their permanent successors can miss important insights. This can impact executing financial strategies. It’s not always easy to pass the baton to the next unless the direction is the same! Moreover, you will hire interim CFO for startups for a limited time span. It will not be easy for them to recognize the unique challenges of your business and feel a sense of belonging. Similarly, the in-house financial team members may find their intervention disruptive. Also read Is It Okay to Use Makeup to Look Younger? Is It Okay To Take Out Business Loans For Startups? Know The Pros And Cons Of Startup Business Loans. Is It Okay To Hire Taxing Company That Outsources For Startups? Managing Your Finances More Effectively.
29 February, 2024 6 Minutes Read
Drainage system: Having a beautifully maintained lawn, a nice centerpiece tree (or two), or even a small, yet fully functional vegetable garden - that’s the dream of every modern homeowner. However, realizing a dream of a gorgeous yard involves digging beneath the surface, both literally and figuratively, right down to the drainage system. This element is often overlooked when planning, yet it is essential for the well-being of the yard and property as a whole. For this reason, it is crucial to ensure its long-term integrity and functionality, starting with selecting the right piping materials and sizes. What Is Best For Drainage In A Yard? While drainage pipes do come in standard sizes, they are not one-size-fits-all. Before you even begin the selection process, there are several factors you should consider to ensure that you’re making the right choice: Drainage system requirements The first thing you need to do is determine the estimated levels of water flow that need to be managed. Typically, this is done by using Manning’s equation, which does require a bit of semi-advanced engineering knowledge. This step is critical to selecting the right pipe size. Soil type & conditions The composition and features of the soil in your yard will dictate the suitability of both pipe material and size for the drainage system. Soil type determines permeability, which is the value that defines how much water can the ground absorb within a given time period. Based on this, you will calculate the pipe size so it is capable of accommodating the excess water volume; Soil conditions refer to the chemical and mechanical properties of the ground, which will help you determine the correct pipe material. Aggressive soils, such as those with high salinity or containing harmful elements, may require resilient or corrosion-resistant materials; Unstable soils that are prone to shifting or settling, necessitate the utilization of pipes made of flexible materials. Local building codes & regulations The vast majority of areas have a very specific set of rules regarding the installation of drainage systems, including some imposed limitations to types, sizes, and materials. Adherence to local building codes and regulations is critical as it ensures everyone’s safety, so make certain to check in with relevant authorities to avoid any potential issues. Cost considerations Your budget will be a significant factor in the final calculation, as different pipes come with differing costs and associated expenses. Pipes made of quality materials and manufactured to meet the highest industry standards, the likes of those found at Blair Supply, will naturally be a bit more expensive but also provide significantly increased longevity. Piping that is lightweight and easy to handle is much easier to install, drastically reducing labor costs, which can amount to lower overall expenses. What Is The Best Pipe For Yard Drainage System? Now that you know how to determine the right type and size of your drainage pipes, it is time to discuss the material options. In general, the most commonly used piping for yard drainage systems are: PVC (PolyVinyl Chloride) pipes are, by far, the most popular choice due to their cost-effectiveness, durability, resistance to corrosion & chemicals, and ease of installation. Corrugated Plastic pipes, typically made of high-density polyethylene (HDPE), are lightweight, flexible, corrosion-resistant, and easy to install. However, corrugation can sometimes impede the effectiveness of the water flow, which is why they are in the 2nd place. Perforated pipes can be made of different materials, but the most commonly used are PVE and HDPE, which determine their traits (as noted above). These can be ideal for subsurface systems that warrant drainage from the surrounding soil, in addition to surface water. Clay pipes are the most used pipes ever, but only because they have been around for more than 2000 years. However, they remain a popular choice in modern times, as they are eco-friendly, corrosion-resistant, durable, and long-lasting while having a unique, natural aesthetic. Ideas To Uplift Your Yard Drainage System. Now that you have a proper drainage system, what else can you do to transform your space? Well, we're here with the best ideas for you to make the most of your yard. While also keeping in mind that you will need to touch up the space soon. Check out these ideas for your yard drainage makeover: 1. Construct a creek bed A channel to take the water away from a low spot in your yard requires a creek bed. This addition to your yard can transform the space from a soggy mess to a landscaper's dream. The right landscaping will make the best of your space, making the creek bed look good despite being dry. The creek bed will not just uplift the space, but it will also solve your drainage problem. This attractive landscape feature will look beautiful while channeling excess water away from the low spot. You can also use a creek bed to drain a low spot. Follow these steps to make a creek bed: Start making a swale, a shallow, gentle drainage ditch. Line the swale with stones or gravel and dimension with boulders, plantings, or a bridge. Voila! Your creek bed is ready. The drainage project does not have to be turned into a creek bed. However, controlling the surface water becomes easy. A subtle way of doing that is simply making a swale. You may choose to build a swale before you sod your yard or seed it. But you can also do it by cutting the grass and replacing it when you are done regrading. 2. Build a rain garden. Building a rain garden allows you to change the low spot after the yard drainage system is installed. To an area where the yard is designed to collect the water that is flooding the yard. You may also fill it with water-loving plants. A drawback of this may be that the space does not become less soggy or it's dry, but it does make the space look a lot better. Additionally, a rain garden helps in holding excess water until there is a chance to drain it away from this space. Also, a plain rain garden is good for reducing runoff that carries a lot of pet waste, lawn chemicals, and sediment. 3. Create a dry well. A dry well can help you fix the water problem easily. This slightly resembles a yard drainage system where you are filling a large hole with an aggregate. This will help in catching the excess water. In addition, you can also hold the excess water while it is soaking into the ground. It is a plastic container that collects water and holds it. Meanwhile, it drains out through the holes. The containers are surrounded by a porous material that can help in draining the excess water. The material can be stacked or placed side by side. The main agenda of installing a dry well is to make it large enough to hold the first quarter of a large rainstorm. Take it easy and you will make an informed decision As it stands, choosing the right piping for yard drainage is a science all in itself. As such, it can get a bit overwhelming at times due to the sheer number of factors that must be taken into consideration. So, our final advice is to not rush it. Take it one step at a time and sooner, rather than later, you will realize your dream of a perfect yard! Also read Is It Ok To Be A Pluto In Scorpio? Is It Ok If Your Parents Disappoint You? Is It OK To Implement Storyteller Tactics? Brands That Did It Well!