Let's say a startup suddenly ramps up to 30 people and maybe grows to 40 over another year or two. What are the maintenance fees as far as legal, CFO and administrative stuff goes (not the set up costs)?
I've seen quotes from outsourced CFO services for up to $1.5k/week. What are all those fees going towards? At that point, wouldn't it make more sense to hire a full-time Controller for $75k/yr?
Similarly, I have no clue how to estimate legal expenses. A retainer with a firm will be necessary as I can't imagine a single person being able to handle the variety of legal stuff that could potentially pop up. How much does a retainer cost? I'm earmarking $1k/month...but that seems low? What affects costs?
Good questions to ask. You have not provided much background..which...haa..I laugh at some of these responses..so many "Know it alls" in these forums who start rattling off advice without asking the right questions or any at all:) So based on what you have stated and needing to know much more information than you provided, personally, I would research the law firms with experience and credentials in your specific industry. Interview them. They work for you. Put considerable time into the questions you want answered and ask them. Most reputable attorneys will consult initially, if you present them with a brief one pager that illustrates you are legit and in need of the services...and capable. They wont follow a trail of your questions seeking free legal counsel though. A good lawyer could be as low as 200-300 an hour up to $800 an hour, and an $800 an hour lawyer may not be as good as the right $300 an hour. You gotta do your homework. If you are a college grad and value your university you might start at the local law school. Find a fresh out of law school passed the bar lawyer if you are desperate for lower fees and you might just find a Lincoln Lawyer type.
As for the CFO, same as above...need more info. BUT, if you are growing...personally I would want a permanent CFO with stock in my company..someone with cache and capability. Offer him/her a couple points of equity if it means getting a top notch CFO. You dont want your financial plan in the hands of a week to week guy getting $1500 a week. And again, I would ask what your revenue looks like along the complexity of your overall capital structure and needs. Are you going to be expanding your debt?...are you going to acquire any companies? take on any additional investors? All this plays into what type of CFO hire you need to make. Feel free to reach out if you have any other questions. I review businesses and business plans and offer strategy. Best
What makes you think you need a CFO? David is right, you haven't provided enough information to assess what roles you actually need filled. There's no reason to fill a C-suite with people unless you actually can't do without such people. Most young companies do NOT need anything more than a part-time accountant, not even a controller.
As for legal support, the amount you need varies tremendously based on the type of business you are. Much of it is front-loaded, meaning the first time you create boilerplate contracts, set up certain organizational things, review policies, etc. Often you can benefit from a law services buying agreement, where you pay a fixed hourly rate for a pool of attorneys who can address specific needs on an ad hoc basis. Sometimes business credit card companies even offer this legal service subscription as a benefit. It's not a retainer, it's just pay for what you use.
Administrative costs vary per industry too, but you can look at other companies in your space and the number of administrative support personnel they have on-staff to handle the associated tasks. Don't guess, research your peers.
" Good questions to ask. You have not provided much background..which...haa..I laugh at some of these responses..so many "Know it alls" in these forums who start rattling off advice without asking the right questions or any at all:) "
You do not provide enough information including your geography, industry, or product type. A CFO is very different than a controller. Retainers for legal are required when there is an engagement. Unless you have a specific issue, you will not need a retainer. If you are in a regulated business, you will need more legal assistance. If you have IP you need to file or protect, you will need a different type (and cost) of counsel. If you have an HR issue, you will have a specialist in that but in the local for the issue. If you are in litigation either as a plaintiff or defendant in any of these issues (among others) then you will need a litigator with a specialty in these areas.