Developing Robust Financial System is the Key to Success: CEO – Faustus Advisory

By: | November 5th, 2020

Start-ups, especially first generation entrepreneurs require constant support in establishing a successful businesses. At an early stage, when businesses have limited resources at their disposal and are competing with large enterprises backed by business tycoons, getting support from experienced advisors is important. It not only helps in checking and improving the entire business process but also in creating right business models.

Human Resources are critical to any business and hiring an experienced professional sometimes may cost huge to start-ups, particularly those looking for getting financial supports at different stages of business lifecycle. Faustus Advisory, founded by Mr. Siba Panda is an organization working to ensure start-ups and entrepreneurs success.

In an exclusive interview with MediaCatalyst, Mr. Siba Panda, Founder & CEO – Faustus Advisory talks about the orgnization and the services it deals with. Here are the excerpts from the interaction.

Faustus Advisory works with start-ups and entrepreneurs at different stages of a business. What is Faustus Advisory and how does it help start-ups and entrepreneurs at different stages of a business lifecycle?

Faustus Advisory is a new age financial consultancy focused on ensuring business success of SMEs.  Faustus Advisory ensures that start-ups can have the trusted support of fully qualified CFO right from inception. The CFO provides capabilities to the SMEs that the standard combination of Accounts Head and Chartered Accountant is unable to deliver.

For a start-up with limited resources, hiring a CFO could be a costly affair, but may be a necessity for those start-ups looking for funding. What are the benefits a CFO brings to the table in such an event?

The fastest journey to VC funding is the critical difference a CFO brings to start-ups.  The CFO enables the right financial matrices which helps VCs feel more assured about investing in your company at the right valuation. The preparation of financial matrices starts much before meeting the VC. They start from the beginning:

  • By Developing a robust finance management which allow better working capital management and for a healthy cash flow by controlling receivable, payable, inventory etc.
  • By setting up right compliances to keep away litigation and build a mechanism for due diligence
  • By choosing right mix for go to market strategy, create unit margins that are VC attractive
  • By structuring employee and labour agreements for win-win
  • By ensuring employee stock-options that attract best talent at low equity cost
  • and the list is endless

CFO role can be more crucial for existing businesses where NPA finance & Stressed funding (Rehabilitation of sick units, modification of repayment schedule, conversion of debt to equity etc.) creates a hindrance for business growth. With the COVID-19 economic crisis, this is a complex exercise requiring the highest level of financial acumen. Faustus Advisory enables organisations to avail the maximum benefit of government schemes

Fund raising through debt & equity (apart from VCs) needs similar due diligence and business structuring with preparations starting much before the actual need.

Start-ups and first-generation entrepreneurs struggle to find information for setting up a well-organized system with limited resources. A considerable amount of time is spent in acquiring knowledge and information after setting up a business. What would you like them to behave and mentored?

Founders need an honest self-assessment and ask their mentor the right questions such as ‘Am I spending most of my time on business growth objectives?’, ‘Is firefighting a necessary part of business growth?’, ‘Where can I apply prevention is better than cure strategy?’, ‘What systems do I need to see as investments and not costs in my journey towards mega success?’, ‘What financial leverage can I use to improve my unit margins?’.

Most importantly, founders usually have a solid thought / idea but by focusing on supplementary activities they usually tend to miss the goal. We at Faustus help them stay focused and drive success by delivering as a business partner, not as a consultant. Multiple brains and teamwork are always better than a smart brain.

It’s common knowledge that 90 % of businesses fail during the first 3 years of foundation. What is your advice for start-ups and entrepreneurs to break this common knowledge?

The most common financial reasons behind this failure rate are-the lack of right financial mentorship, inability to create the right matrices for VC funding, short-sighted management of financial / contractual matters, buy vs lease decisions, compliance with taxation rules, director compensation, and reporting, cashflow vs pipeline misjudgement, credit term opportunity losses, business restructuring impasse. 

Traditionally, when faced with a challenge, business owners take the help of consultants. This comes with an inherent conflict of interest between the consultants need to maximise their earning and delivering a solution that stands the test of time for the business owner. Simpler, cheaper solutions are thus ignored, and a process of continuous fixes created. Founders need to invest in senior resources at the earliest.

How can Faustus Advisory help keep the CFO cost low for Start-ups?

Business-owner spend considerable time and mindshare in grappling with problems caused by inadequate financial talent. Their mindshare would be better used for business growth and client management. “At Faustus Advisory, it is our endeavour to help keep business focus on their core and allow experts to handle their core area. In the process we make entrepreneurs ‘Atma Nirbhar’.”

We ensure that cost of CFO remains in-line with the start-ups revenues. Faustus Advisory does this with carefully auditing the life-stage factors and providing support accordingly while all the time being engaged mentally as a full time CFO. 

In addition, as an outsources CFO firm Faustus Advisory enables clients with benefits that even a full-time CFO would not be able to match. These include c ontinuity of trust with no risk of CFO exit, economic cost in line with the size of business, support staff to deliver allied services.

Faustus Advisory has a pool of professional expert in financial, compliance and administrative to meet all client needs including financing growth, enabling expansion plans, optimizing operations, managing business risk, rewarding employees, supporting strategic ambitions.