(a) Bankers, accountants, lawyers, consultants, fund raisers – how to deal with eCFO service providers
As an eCFO you will have to deal with a range of different service providers. While making good decisions in this area help you to substantially improve your operations and allow you to run the business effectively, making bad decisions can be very costly to you and your new venture.
I would recommend that you first understand your business well and then look for advisors. You should strategically pick advisors who understand your business and can help you develop it further. As a start-up you should have a good combination of old, reputable wisdom and young, start-upish advisors who will help you to rapidly grow the business. I have selected a few categories of advisors and provided my personal opinion of each. It would be interesting to get some feedback regarding your experience and “best practice for working with start-up advisers!”
eCFO Tips: Always do a beauty contest when it comes to selecting advisors/service providers. No matter how small you are, always have at least 3 potential advisors compete for business. You will learn a lot through these interviews and it will be time well spent. Make sure you also invite people from various background e.g. individuals, small, medium and large firms
Find a bank that clearly shows you a road towards obtaining a rating that will allow you to take small steps towards bank financed leverage. Initially, that might mean a conversion of your rent deposit, credit card limit extension and eventually working capital lines. In the beginning you will have a lot of interaction with your banker so make sure you have a personal contact and a strong backup team for daily requests. Secondly, make sure that they understand what you do and offer sufficient support through customized banking software or (in my opinion much more preferable) solid internet banking functionality.
Fees and costs associated with your account should be minimal and waived for at least the first year. Remember you are giving them money and they will not extend any credit to you initially. You should not be paying for giving money to someone.
Find an accountant who knows your industry, is extremely reliable and detail-oriented. There should be absolutely no excitement. In addition, it is great if they are looking for new business and are willing to deal with all the additional work of a start-up. An additional great attribute would be a close connection to the regional tax authorities to handle any problems on a personal level. We checked out accountants ranging from one-man shops to the Big Five and eventually settled with a firm that is rapidly growing and has close ties with several start-ups.
From my personal experience I would strongly advice against one-man/woman shows or very small companies. You always need back-up in terms of systems and most importantly in regards to having multiple people who can work with your accounts. I have seen a case where an accountant got sick and suddenly nothing got done anymore. In addition, there is also nobody double-checking the work – as it turns out most of the work done by the sick accountant was either incomplete or wrong but this was only discovered after several months by the new accountancy firm and at additional cost. So overall I would recommend that you stay away from small firms and pay a little extra for some peace of mind.