4 min read
Scarlett Pierce
Feb 4, 2021 7:05:26 PM

With each new year comes a fresh set of opportunities and challenges, and 2021 is no different. While 2020 was a tough year by all accounts, it’s also a rich source of learnings and inspiration to guide the way we run our businesses, manage our careers and balance our lifestyles.

Capdesk partnered with startup and growth venture finance consultancy EmergeONE to find out what the finance professionals in their team, working with their portfolio and others, are planning to take from last year, and what they’re happy to leave behind. Among the 15 individuals we interviewed, five distinct themes emerged:

  1. Maintaining a higher degree of in-depth financial forecasting
  2. Focusing on cash flow and the no-more-runway scenario
  3. Giving employees flexibility to work in a way that suits them
  4. Taking responsibility for staff mental health and general wellbeing
  5. Ensuring CFOs play a strategic, analytical role in their businesses

In-depth financial forecasting

When the pandemic hit, many businesses around the world found their optimistic financial forecasts were woefully ill-equipped to see them through the economic downturn that followed. We heard from one CFO that a more disciplined approach to forecasting was here to stay:

“Forecasting will become more milestone-driven and incorporate scenario planning and analysis that seriously takes downside and mitigation into account.”

Another reflected on the new factors at play as a result of coronavirus, explaining that “2020 has thrown a number of never-seen-before ‘what-ifs’ into the UK and global economy, so making sure there’s a solid understanding of these new factors is key in effective scenario planning.”

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Cash flow and runway

If the typical startup’s finance team played a supporting role in 2019, it moved front and centre in 2020 and looks set to stay there. One CFO said “this year taught us that getting under the hood of our numbers can be short-term make or break for many ventures”, an activity that CEOs and Founders should be involved in. Others told us:

“Getting Founders to focus on cash has been key. Top-line revenue growth, month-on-month and year-on-year recurring revenue growth, growing headcount, increasing call volumes, increasing active users and many other metrics are very important for a startup. All of these data points should be tracked, reviewed and used to drive business decisions.”

“Convincing Founders to forecast more regularly, plan for different scenarios and move away from being reactive has been a really important change this year – these were important before, but even more so in a post-pandemic world. It’s been imperative to understand the short- and long-term capital flows in the business, push for more data-driven forward forecasting and figure out what sort of runway buffers we have. That tells us when we might need to go out and bolster the balance sheet and move the cap table.”

Flexibility for employees

There’s been plenty of press about the upsides of working from home, and the likelihood it’ll become the ‘new normal’ in 2021 onwards. The CFOs we spoke with felt it was a shift that benefitted employees, but that it would ultimately be combined with some office-based work and business travel.

“Staff have discovered the hours saved by no longer commuting, and benefit of avoiding the disapproving stare of colleagues when they arrive late or leave early. Office space will still be required – as many teams that need to collaborate closely find it easier to whiteboard ideas in a collective environment – but it will be paid for by the hour.”

“Business travel, which has been suspended for a while, may start to come back but it will need much more justification in the future.”

One CFO understood that expecting more employees to work from home came with a responsibility on the part of the business to provide for them, citing the need to “ensure all staff have a decent-sized screen, a suitable office chair and their mobile calls paid for.”

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Mental health and wellbeing

Lockdowns around the world took a significant toll on our wellbeing last year, leading to reported increases in loneliness and isolation. As a result, we saw a shift in focus towards mental health and team morale.

“One thing that is needed for the welfare of all staff is an understanding that if someone is ‘on holiday’ or has changed their setting to ‘do not disturb’ then they must be left alone,” said one. Others cited a business-wide change to “prioritising mental and physical health”, and using staying-in-touch tools like Donut “to keep team spirit high”.

Several interviewees also noted the importance of taking better care of themselves, reporting hiring a life coach and prioritising “exercising during the week, which helps physically but more importantly, mentally.”

The strategic role of CFOs

Lastly, we heard that many CFOs have become more involved in strategic business decisions, and expect to maintain that position. Having risen to the challenge of keeping companies afloat through exceptionally hard circumstances, one interviewee explained to us:

“The current environment has emphasised the importance of the CFO not as bean counter but as a strategic advisor. I will continue guiding the business to its goals through financing, planning and giving another perspective in decision-making.”

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