Many early-stage companies treat finance as something they can handle themselves—at least in the beginning. And for a while, that approach seems to work.
But as businesses grow, what once felt manageable can quietly become a risk. Inaccurate financials, unclear cash flow, and missing systems don’t always cause immediate problems. Instead, they create a false sense of confidence—one that often surfaces at the worst possible moment.
I spoke with Jennifer Barnes, who’s served as the CEO of Optima Office since 2018, about why DIY finance can break down, the real cost of fixing it too late, and what founders should be doing earlier to avoid those problems.
Rieva Lesonsky: Many early-stage companies treat finance as something they can manage themselves. Why does that approach often seem to work—until it suddenly doesn’t?
Jennifer Barnes: Early on, the numbers are simple enough that a founder can keep them in their head or in a spreadsheet. Revenue is going up, bills are being paid, and the P&L seems right. That feels like financial management. But what’s actually happening is that the company has an inaccurate balance sheet, and they have no real idea how many days of cash they have on hand.
The cracks form quietly: books that are slightly off, cash flow that’s never truly forecast, tax obligations that aren’t tracked. Everything looks fine until there’s a trigger, a fundraise, a big hire, an audit or bank request, and suddenly the foundation isn’t there.
Lesonsky: You’ve said DIY finance doesn’t fail loudly. What are some of the warning signs founders tend to miss?
Barnes: The warning signs are almost always things founders rationalize away. They don’t see the value in having a skilled Controller lead and manage the accounting department, and they think they are being smart with their money by having only a bookkeeper. They don’t actually know their gross margin by client or employee, and they have no idea which metrics to focus on.
Their bookkeeper hasn’t flagged anything, but nobody’s really reviewing their work either. They tend to make decisions based on their bank balance rather than a cash flow model. These aren’t red flags founders panic about until one day a company like Optima gets started and points out all the things that were missed, and that they have been relying on inaccurate financials.
Lesonsky: When financial issues do surface during fundraising, an audit, or a cash crunch, what typically goes wrong?
Barnes: The timing is almost always terrible, because these moments are already high-pressure. In a fundraise, an investor asks for clean financials and the founder realizes they’ve never actually had them reviewed. In a cash crunch, there’s no 13-week cash flow model to work from, just a gut feeling and a prayer. During an audit, you’re retracing years of transactions that were never organized properly to begin with. The underlying issue is rarely that the money was mismanaged on purpose. It’s that the financial infrastructure just wasn’t built. And fixing it under duress costs far more than building it right the first time.
Lesonsky: How can messy or incomplete financials impact a company’s valuation or ability to raise capital?
Barnes: Significantly, and in ways founders don’t expect. Investors price risk. When financials are disorganized, inconsistent, or clearly unreviewed, it signals operational immaturity, and that gets baked into the offer. I’ve seen companies take real valuation haircuts not because their businesses were weak, but because the financial story couldn’t be told clearly. And in some cases, deals just fall apart during due diligence. No investor wants to fund a cleanup project. They want to fund growth, and they want ROI.
Lesonsky: At what point should a founder stop trying to manage finances internally and bring in outside expertise?
Barnes: Honestly, earlier than they think. The most common answer I hear is “when we can afford it,” but the right answer is “before you can’t afford not to.” If you’re past $1M in revenue, have more than a handful of employees, are planning to raise capital, or are operating in a regulated industry, you need more than a bookkeeper. You need someone who can interpret the numbers, not just record them. A fractional CFO or controller at that stage isn’t overhead; it’s a strategic investment.
Lesonsky: There’s growing interest in fractional finance teams. What problem does that model actually solve for early-stage companies?
Barnes: It solves the access problem. For most of their growth years, early-stage companies can’t justify or afford a full-time CFO, controller, and HR director. But they absolutely need that level of expertise. The fractional model lets you bring in senior talent that has seen hundreds of companies at your stage, knows where the landmines are, and can build the right infrastructure without the cost of a full-time executive. You get the experience without the overhead. For a $3M or $5M company, that’s not a workaround; it’s the smart thing to do.
Lesonsky: What’s the biggest misconception founders have about hiring finance support?
Barnes: That a bookkeeper is enough. Bookkeeping is historical recordkeeping. It tells you what happened. What founders actually need is someone who can tell them what’s happening, what’s coming, and what decisions they should be making based on the numbers.
There’s a meaningful difference between a bookkeeper, a controller, and a CFO, and most founders don’t know what that difference is until they need the next level and they don’t have it. Also, most bookkeepers cannot generate an accurate balance sheet, and when the balance sheet is wrong, the P&L is almost always pretty far off.
Lesonsky: What are the most important financial systems or processes a young company should have in place early on?
Barnes: A clean general ledger from day one. Don’t let it get messy, and plan to fix it later. A monthly close process, even a simple one, so you always know where you stand. A cash flow forecast that looks at least 90 days out. Documented revenue recognition policies, especially if you’re SaaS or subscription-based.
And the separation of duties. Even in a small company, the same person shouldn’t be cutting checks and reconciling accounts. These aren’t glamorous, but they are the difference between a company that scales cleanly and one that has to rebuild everything mid-flight.
Lesonsky: If a founder could do just one thing today to avoid financial problems down the road, what would it be?
Barnes: Get a financial review from someone outside the company, not to audit you, but to tell you the truth. Most founders have never had an experienced finance professional look at their books with fresh eyes and say, “Here’s what’s missing, here’s what’s at risk, here’s what you should build next.” That conversation, even once, can save years of cleanup and thousands, sometimes millions, of dollars. You can’t fix what you don’t know is broken.
My Takeaway: What stands out here isn’t just that financial issues can derail a business—it’s how quietly they develop.
For many founders, things feel under control as long as revenue is growing and bills are getting paid. But without the right systems and oversight in place, that sense of control can be misleading. By the time problems surface—during a fundraise, an audit, or a cash crunch—the cost of fixing them is far higher than if they’d been addressed early.
The lesson isn’t that founders need to become finance experts. It’s that they need to recognize when the business has outgrown a DIY approach—and bring in the right level of expertise before small gaps turn into bigger risks.
Rieva Lesonsky is the founder of Small Business Currents, a content company focusing on small businesses and entrepreneurship. You can find her on Twitter @Rieva, Bluesky @Rieva.bsky.social, and LinkedIn. Or email her at Rieva@SmallBusinessCurrents.com.
Photo courtesy Getty Images for Unsplash+
