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Finance and Legal

When starting a new business, Finance is often nothing more than a part-time book keeper taking care of expense payments, payroll and hopefully some deposits. Many startup CEO's do this themselves or have one of their investor Board members takes care of it (often having a finance background). The need for additional finance functions grows in-hand with the evolution of the business and can sometimes outgrow it, becoming a place of overhead that needs to be managed.

Legal services are often provided by contracting with a recognized law firm. Starting with ones that specialize in technology startups tends to be the right approach, if for no other reason that they are more affordable over big established firms. Prior experience addressing the legal needs of technology companies should outweigh most other reasons for choosing one firm or individual over another. Startup CEOs that do their own legal work is high risk and generally should be avoided. An experienced CEO can do much of the leg work but should still rely on an experienced lawyer for all business-crucial matters (more on Legal below).

Finance provides a variety of essential functions to any business, including effective money management, business performance metrics, Board meeting secretary, acquisition due diligence, coordinating legal services, employee service administration (health care, expense management, ...) and several more. It's organization tends to be fairly traditional across the industry as does the steps taken to grow it. In the unfortunate event of closing a business, Finance plays a key role to make sure loose ends are tied up -- especially as it relates to Director liabilities.

The first significant Finance hire tends to be a Controller which manages the financial inflows and outflows of the business and acts as the lead for the rest of the Finance team. Further growth often demands a need for a Chief Financial Officer (CFO) who can make strategic contributions to the management team (this does not mean a Controller does not also contribute) but generally a CFO looks out for the long term health of the business. Finance can play a purely administrative role or be more of an active participant in the growth of a successful business -- both can work but the latter often provides more growth leverage.

When all is said and done, Finance is often the first team to be disbanded in an acquisition and the department working the hardest to complete one -- job loss is not much of a reward for hard work, so treat the Finance team well so they remain dedicated to the success of the business, right to its last day and beyond. (Finance and Legal Topics)