If you want to internally audit your accounting department, prepare for a capital raise, and scale your business proactively—then no matter what your financial goals are, your company could likely benefit from small business CFO services.
So what is a CFO, and what do they bring to the table for early stage companies?
What is a CFO?
A Chief Financial Officer (CFO) is a senior executive responsible for overseeing all financial aspects of a company, ranging from day-to-day operational spending to long-term financial planning and strategy.
While the specific duties of a CFO can vary depending on the organization, they typically encompass one or more of the following responsibilities:
- Supervising financial operations, which may include managing purchases, accounts payable (AP) and accounts receivable (AR), investments, mergers and acquisitions, payroll (PR), and financial forecasting.
- Setting and strategizing to achieve financial objectives and goals.
- Managing audits, both internally by planning and executing internal audits and externally by liaising with external auditors.
- Cash management to ensure liquidity and optimal financial health.
- Facilitating capital raising activities and maintaining relationships with investors.
In essence, CFOs possess the expertise to oversee, manage, or advise on all financial matters within a company. It’s worth noting that CFO roles can vary in terms of employment structure, with options ranging from full-time, in-house positions to fractional, part-time, virtual, or on-demand CFO arrangements, providing flexibility to companies seeking financial expertise and support.
5 Reasons to Hire a CFO
CFOs are seasoned, high-caliber professionals capable of adapting to various roles within your business as required. But why should you contemplate hiring one? Let’s delve into five reasons why engaging small business CFO services could be a savvy decision as you scale.
1. They Can Help Direct Financial Projects
If your business has reached a successful operational stage—with a team in place, a loyal clientele, and brand recognition—it may be primed for expansion. However, this growth journey often introduces unfamiliar tasks and challenges to your agenda.
You might sense that a significant financial project lies ahead but feel uncertain about where to begin. This is where a CFO can step in to assist with various initiatives, such as:
- Implementing new accounting software
- Hiring accounting personnel
- Managing legal changes pertaining to incorporation status, business name, ownership, and stakeholders
- Preparing for potential mergers and acquisitions
- Facilitating internal or external audits
If you find yourself navigating uncharted financial territories and could benefit from expert guidance, it might be time to bring a CFO on board.
2. They Provide Financial Forecasting Expertise
Financial forecasting plays a crucial role in predicting how various changes within your business may affect its future performance, whether it’s operational adjustments, staffing alterations, or product developments.
While creating a basic if/then model in Excel is feasible, a CFO brings invaluable expertise to the table, offering more sophisticated forecasting insights.
Drawing from their extensive talent and knowledge, CFOs possess insights into:
- Market dynamics, including interest rates, customer purchasing power, and regulatory changes affecting labor.
- Advanced forecasting methodologies, such as linear regression models.
- Tax policies and regulatory compliance specific to your jurisdiction.
- Potential high-impact factors on forecasts, such as mergers and acquisitions, fundraising campaigns, or unforeseen financial crises.
A CFO provides multifaceted perspectives on your brand’s financial future, backed by the ability to anticipate and navigate potential changes on the horizon.
3. They Can Help Establish a Solid Financial Foundation
If your business is in its infancy stages, you may still be in the process of establishing a solid financial foundation. In such cases, leveraging small business CFO services can prove invaluable in setting up a stable financial framework for your brand by:
- Implementing accounting software tools: Selecting the appropriate platform, seamlessly integrating it into your day-to-day operations, providing training to accounting staff for proficient utilization, and maximizing its functionalities.
- Developing and refining Standard Operating Procedures (SOPs) for accounting tasks to ensure consistency and efficiency.
- Automating various financial transactions, including loan and bill payments, payroll processing, accounts payable check runs, regular investments, and transfers between different accounts.
- Establishing pay structures and benefits packages for employees to attract and retain talent effectively.
- Procuring and managing insurance policies to mitigate risk and protect your business assets.
By capitalizing on small business CFO services, you can lay a strong financial groundwork during the early stages of your business, setting the stage for sustainable growth and success.
4. They Can Connect You With Their Networks
CFOs are seasoned executives with extensive professional networks. When you engage with a CFO, you gain access to their contacts, which may include:
- Other industry executives, including competitors
- Potential employment candidates
- Consultants
- Prospective investors
- Regulatory authorities
These connections can provide invaluable insights and opportunities to outperform your competition and expand your brand’s reach.
5. They Know How to Grow Burgeoning Brands
What strategies are needed to drive profitability, attract investors, or execute significant investments? CFOs possess the expertise to guide your company through crucial growth milestones.
Consider a scenario where you aim to achieve profitability within the next year. A CFO can assist in devising and implementing strategies such as:
- Optimizing personnel to increase productivity
- Implementing cost-saving measures
- Developing comprehensive budgets
- Launching targeted marketing campaigns to attract new customers
- Facilitating capital raises
- Enhancing branding to bolster market reputation
While a CFO may not be directly involved in tasks like designing logos or posting job ads, their strategic oversight ensures the allocation of resources towards initiatives that propel your brand forward.
Are You Ready to Hire a CFO?
CFOs play a crucial role in business growth, but can your company afford to hire one? Before diving into recruitment, consider these key questions:
- Are there significant obstacles hindering your brand’s progress?
- Do you possess the financial expertise to effectively manage your company’s finances independently?
- Do you have a clear understanding of your financial projections for the next six, twelve, or twenty-four months?
- Depending on your responses, it may be time to start budgeting for a CFO position.
However, it’s essential to recognize that the CFO role is evolving. If you’re unable to support a full-time, potentially six-figure hire at this stage, there are alternative avenues for accessing top-tier financial services from a seasoned CFO:
- Engage a CFO on retainer for on-demand support.
- Hire a per-project CFO to tackle occasional major tasks.
- Explore fractional, virtual, outsourced, or consulting CFO services tailored to your needs.
