When it comes to developing your FinOps strategy, you may find some SaaS business owners want to use the same old process, while others will want to find a shiny new tool that will magically solve all their issues. Unfortunately, boosting your organizations’ financial performance and strategies isn’t that easy.
You might be wondering, what FinOp strategies are out there? And which will work best for your startup to ensure financial security? As FinOps leader SaaSOptics explains, maintaining a consistent, well-documented process (and the tech stack to support it) is the way to ensure your FinOps can rise to meet any challenge. “When you’re focused on consistency in your financial operations, you’ll not only maintain compliance with standards, but you’ll set up your team to breeze through audits, develop trust with investors, and even make smarter business decisions.”
Key Components to a Robust FinOps Strategy
Well-planned FinOps can help you understand where your costs are coming from, and how to reduce them. You need to understand how much money it takes to make more money. Ensuring that your FinOps tech stack can properly attribute costs to the services you provide is an essential ingredient in your formula for success. This will help you determine your long term profitability, benchmark performance against competitors, and shape decisions for when you need to pivot to a new product or service (or abandon an underperforming one).
Real-time Decision Making
We live in an unstable world. A global pandemic has redefined the global economy, and armed conflict has generated significant turbulence in global markets. What was true yesterday, might not be true tomorrow. This means you need to make decisions in real time, as events unfold. A robust FinOp strategy can generate accurate predictions and empower your leadership team with the information they need to make fast decisions. You need to ensure that your FinOps team has the tools they need to generate reports on-demand, not just at the end of a fiscal quarter.
Planning & Resource Allocation
While it’s important to have the information to make decisions in real time, this doesn’t mean you should abandon long-term planning. By utilizing data, FinOps strategies can forecast future resource needs so you can allocate resources accordingly. You’ll need to understand where resources are being used most efficiently (or inefficiently) within your organization, particularly as you begin to scale.
A major milestone in the life of every startup is its first real audit. Most likely, this was a painful, confusing process that involved considerable time and money. And, if you don’t have your FinOps organized appropriately, it’s only going to be worse. As your business grows, you’ll inevitably need to worry about compliance. Making sure your financial operations are GAAP compliant from the outset will save you trouble down the road.
Investor Reports + Prospectuses
Audits aren’t just helpful for ensuring your books are healthy. They’re a requirement when seeking funding from nearly every source. When you scale, you’re going to need investment. Making sure that your financials are organized in a way that aligns with investor expectations is a key ingredient in your company’s growth. Ensuring that your FinOps are creating investor-grade reports from the outset will make it easy when you need to start pitching to sources of capital.
FinOps and Your Investment Pitch
Up to 90% of startups don’t survive the first 5 years in business. For this reason, mastering your investor pitch is key. You need to ensure that your company has the liquidity and “financial runway” to sustain the losses that inevitably come with scaling up. Unsurprisingly, the key questions on every investors mind will be:
- How much investment is needed?
- How will I receive a return on that investment?
- How will this investment support the success of the company?
- Have you received previous investments, and what has been their impact?
The list can go on, but ultimately, you’ll need to be able to answer these questions quickly and thoroughly — something that will only be possible if your FinOps are well-organized and properly supported with a robust tech stack.
FinOps provides the foundation from which your company operates. If your FinOps aren’t well-planned, then it becomes impossible to operate efficiently, scale your business or attract investment. Start your planning early, and make sure you revise your strategy regularly to account for the changes in your business.
If you want to be guided through the world of FinOp strategies and significantly impact your financial operations, make sure to sign up for SaaSOptics’ 5-week FinOps boot camp.
Ready to perfect your pitch to investors? Check out our on-demand Startup Pitch Competition to learn the secrets to making the most of those important investor meetings.
Photo by Markus Winkler on Unsplash