The finances of a company, especially of one as fragile as a startup or SME, can make or break it. For most companies in their early stages, it can be difficult to properly budget and plan, manage cash flow, and ensure profit margins are sustainable but reasonable.
To make things worse, it can be quite expensive to hire a qualified full-time Chief Financial Officer (CFO) to make sure things are running smoothly and the company has enough runway to continue operations into the new year.
To solve this problem, THE SCALABLE CFO, an Abu Dhabi-based startup, is enabling businesses to get the benefits of a CFO without the inhibiting costs of actually hiring one. This is done via the as-a-Service business model, where customers can leverage the company’s team of finance consultants across a wide range of strategic and operational expertise. They are matched with a consultant based on the financial service or expertise they are looking for, who then can deal with their monetary needs and tailor and automate custom solutions for their business, on a fractional/part-time basis.
The Abu Dhabi SME Hub spoke with Oreabetse Matlhare, Co-Founder and CEO of THE SCALABLE CFO, to learn more about her company’s interesting business model and platform.
Oreabetse Matlhare, Co-Founder and CEO of THE SCALABLE CFO
Let's circle back to the early days of THE SCALABLE CFO. How did the founding team come up with the idea for the company, and what market gap were you trying to address?
We started THE SCALABLE CFO with a vision to level the playing field for SMEs and professionals – allowing SMEs to make good financial decisions and allowing experienced professionals to help them. Simply put, we saw a world where SMEs were healthier and had a better chance of survival.
After years of juggling a career and side hustles, I came to a crossroads and finally made the big leap and left corporate to focus full-time on what was an e-commerce “side hustle.” While working on that, I was taking on part-time CFO roles to pay the bills. Through this, I got introduced to the startup and small business ecosystem of Dubai.
I realised that as small as these businesses were, they were making big financial decisions about their futures, and they were struggling – struggling to get the right finance expertise and struggling to have the right systems and processes set up as they grow. We focused on the people problem first as we saw a gap in the market for SMEs to find part-time experts and vice versa, so we launched THE SCALABLE CFO as a managed marketplace platform that connects small businesses to the best CFO to work with them part-time.
How did you acquire new customers when the company first started (since the 'CFO-as-a-service model' seems quite new in the region)? Also, did you have any onboarded consultants at the time, or were customer requests handled in-house by the founding team?
We partnered up with business hubs, startup communities, and industry-specific event organisers to deliver workshops and started to acquire. We also tapped into our own networks. We managed to build a client base that we were servicing ourselves as CFOs allowing us to test the pricing model and proposition that would later inform the marketplace. It was important to test this non-traditional approach from the beginning so even though we were the “part-time CFOs,” we behaved like a marketplace and packaged what we do as a service subscription, essentially productising a service. This was done before we had the tech.
The Scalable CFO network has finance consultants across a wide range of strategic and operational expertise. SMEs and startups can choose the finance services and expertise that are currently a priority for their business to get matched to the most relevant expert.
What are the core services offered by Scalable CFO, and why was the as-a-Service structure your go-to business model?
The core services [we offer] are part-time CFO or Chief Financial Officer services, and at times we couple them with bookkeeping services. Essentially, a company is outsourcing their entire finance function to freelance professionals rather than hiring full-time. This lends itself well to an as-a-service model because billing is a fixed predictable amount monthly that provides the same level of predictability as paying monthly salaries, but without the full commitment and upfront cost of hiring full time.
Today, six years after the company was founded, how have your services and business model evolved, and what lessons have you learned?
We realise the problem is a lot deeper than people. The finance infrastructure is a problem. Small businesses are still using tedious methods to manage their day-to-day finances, if any, which is why many companies end up with frustrations and issues in their finance back office. This is an expensive and time-consuming problem to solve not only for the business owners but also for the professionals we might match them to. Therefore we are developing a SaaS to help small businesses automate their finance operations and financial decision-making. We are designing this software to make it easy for even non-financial users to do finance tasks and make better financial decisions day to day.
How would you describe the finance needs of SMEs and startups today compared to when you first launched? Have things improved perhaps, or are there new challenges?
Cash flow has always been important, but the pandemic has made it imperative because the impact of running out of cash can be so devastating. To raise money, you need to have a decent runway, so it’s becoming more critical to plan your financial outlook well in advance. It's not just limited to cash but aiming for profitability too is important. We see more and more companies wanting to improve their financial planning and spend control.
Why was Abu Dhabi the location of choice for setting up your company?
Abu Dhabi offered competitive rates for licensing for technology development companies. ADGM seemed truly invested in helping SMEs get an easier start.
THE SCALABLE CFO was selected as part of Flat6Labs' latest cohort of startups. How did you benefit from this programme?
Our business is going through a pivot and introducing a new product with a different business model. It was important for us to ensure we did it right and had the right support during this phase. This is exactly what we got from Flat6labs.
Finally, what's next for THE SCALABLE CFO? Any new services, expansion plans, or funding rounds to look forward to on the horizon?
We are just about to launch the MVP of the new SaaS platform. In this first version, businesses will be able to make payments and manage their cash flow in ways that optimise it and save time. We want to make this software easy to use and accessible.