Idea validation - C.F.O. services for startups

tylervan

New member
Hello fellow Redditors,

I would like to validate a need for accounting services handcrafted for startups.

First, let me introduce myself. I'm a French citizen who has been living in the Philippines for the past 16 years. I'm a CFO by profession but an entrepreneur by heart. I have 3 failed attempts under my belt: an enterprise social network (2010), a recruitment tool (2012) and a fixed-assets software management (2013). Objectively, I failed because I did not have sufficient funds to invest and, as you all know, tech people don't work for free (and it's totally understandable!).

A friend of mine, who has been more successful on the startup scene, told me that I should look into offering accounting services (for which I have 20 years of experience) instead of trying to venture into fields that I may not master entirely. I have been thinking a lot about that and I am now ready to move forward with a project that is definitely not as sexy as building an app but could hopefully turn into a success.

When building a team, the minimum viable partnership (MVP?) is composed of one tech and one non-tech partners. But what about the administrative tasks? At first, you will handle them by yourselves but it's time consuming and you may not have the knowledge to do it right. Then, once you start having some revenues, you will retain the services of a bookkeeper. And...that's about it. You will wait until the first round of funding before hiring an in-house accountant or a C.F.O. if your first round allows you to do that kind of investment.

What I want to offer is the services of a C.F.O. to startups. A C.F.O. is not just a glorified accountant. He is an adviser who will help you with your business plan. He will setup your accounting system, design your financial dashboard, advise you on cost management... But I can also take care of your payroll, billing, cash management, monthly reporting, yearly financial statements. In fact, the possibilities are endless. Think of it as a remote team dedicated to handling your administrative, accounting and HR tasks.

In order to do that remotely, I will work with all the wonderful tools that I offered online. Xero, Wave, Quickbooks for the accounting, OrangeHRM for employees management, CRM tools such as CapsuleCRM or Insightly, Gusto for the payroll, Freshbooks for billing and basically any saas tool you may want to use.

The only thing I can not do is tax computation as this matter is too complex to be managed without a local knowledge.

Now let's talk about revenue! I am planning to charge a fixed fee of 1,000 USD to work on the business plan and do the setup of all the tools. Then, I will offer different plans depending on the number of employees and the number of customers.

Plan 1: 5 employees max., 100 customers: 500 USD/month

Plan 2: 10 employees max., 500 customers: 750 USD/month

Plan 3: add 10 employees or add 500 customers: 200 USD/month added to Plan 2.

Plan 4: more than 100 employees, more than 5,000 customers: congratulation, you are successful and it's time for you to have you own in-house team who will benefit from all my work!

The idea for me is to grow as your business grows.

What do you think of that? Do you think there is a market for my services? Is there anything else that you might think could be important to offer?

I am really looking forward to receiving your outputs on my soon-to-be very own startup!
 
@tylervan There is definitely a market for this service as evidenced by a ton of companies that are providing this service in the US and other top startup markets.

What geography are you planning to target?

There are two obvious intrinsic problems with this. 1. It is extremely hard to provide differentiation and it's not a defensible solution. As long as you can generate sales leads and convert them, you'll do fine. 2. As your clients grow, they will leave you. As companies grow, they need to do more of these tasks in house. They'll hire a cfo and move tasks inside. You can still provide support like other accounting services firms.
 
@ryushin Thanks for your answer.

In fact, my plan is to differentiate myself by offering financial dashboards and cost accounting management, something that is always set aside by the bookkeeping firms. 20 years ago, the first CPA who hired me told me once that if we think that we should only do bookkeeping and taxes, we are failing our clients.

Regarding the problem #2, I do think that my services, as defined in my post, are really for startups. And yes, I should lose them once they grow enough to have their own team. But luckily by that time I would have other services (BPO is still booming in the Philippines) to offer to them.
 
@tylervan As a startup that uses a similar service (bench.co), i think the prices you have outlined right now are too high. Perhaps you'd do more than they do, but we don't really feel a need for more than bookkeeping & taxes, so not sure what I'd be spending $500 on.

Definitely a need for more stuff in this space though.
 
@gladysrivera Thanks for your answer. I had a look at their website and I agree with you: I would not pay 500 bucks for bookkeeping services. I think that my main problem here will be to explain to potential clients what could be the R.O.I. of having a personal CFO. Bookkeeping should only be a prerequisite to accessing to more valuable financial information.

For instance, working on a budget is something extremely valuable for any founder. Although it's not highly technical, it still require some knowledge. And in order to show some realistic figures, it's always good to have the point of view of a external adviser.
 
@tylervan Why wouldn't I just hire my own CFO and not someone who is juggling multiple accounts? Financials are extremely important; I want someone doing it full-time just for my business.

How are you going to compete with that?
 
@613jono You are right and I feel a bit stupid... I should have googled "administrative services for startups" before posting here. And the idea is not new; one of the first result is a link to an article dated June 2001. And the top ranking is "The Startup Admin"...
 
@onisim You are right and I would strongly advise against my own solution for a company which generates enough revenue to pay the salary of its own CFO (70K minimum in the USA). My target is really the startups, companies without the financial ability to hire a CFO but who are looking for more than just a bookkeeper.
 

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