5 Signs That Your Business Could Benefit From Fractional CFO Services

Fractional CFO services can help you grow your business. Even if you’re small business is really small, you can benefit. 

Want to know when it’s time to hire one? In this post, we’ll give you 5 signs your business needs a fractional CFO.

outsourced CFO

CFO Services For Small Business

Before we dive into whether or not you need to hire a CFO for your company, let’s take a look at exactly what CFO services for small businesses include.

CFOs hold one of the highest positions within a company. They are usually just below (or next to) the Chief Executive Officer (CEO) or Chief Operations Officer (COO). In regard to financial roles within an organization, the CFO is the top job. Everyone else in the financial department reports to them in one way or another.

While lower-level positions handle the day-to-day tasks of Accounts Recievable/Payable, payroll, bookkeeping, tax preparation, etc., CFOs are responsible for taking care of the company’s long-term financial forecasting. Their decisions are based on the data and information generated by other accountants within the business, but their focus is less on details and more on the trends those reports reveal.

They then advise the company’s CEO and other stakeholders on how to best make decisions that will impact the business’s future. 

A CFO does not necessarily need to be an accountant or hold a CPA certification in order to perform the duties of their job. However, advanced knowledge of accounting principles is certainly important to do a CFO’s job well.

Most CFOs rise through the ranks of accounting before landing the top financial position. They most likely have spent time managing business finances in a variety of lower roles, and usually hold graduate degrees in finance. Many also have earned an MBA and have considerable experience in the business world. 

Outsourced CFO

Most small businesses can’t afford to hire a full-time in-house CFO. But that doesn’t mean they don’t still need one. 

To fill that need, you can take advantage of specialized CFO services for small businesses. These are outside firms or individuals that you can contract with to get the same financial expertise without the expense and hassle of hiring a C-suite employee.

Here are 5 ways that businesses can benefit from hiring an outsourced CFO vs an in-house one:

  1. They’re available when you need them. You might only need help on a monthly or quarterly basis for a few hours at a time.
  2. They are cost-effective. You don’t have to pay for a full-time person if you only need them part-time.
  3. They provide an outside perspective. Since most fractional CFOs serve multiple companies across a wide range of industries, they are in a position to help all of their clients better understand trends in the overall business world.
  4. They bring industry knowledge. Because they most likely also work with other companies in your industry, they are perfectly positioned to help you stay on top of the best practices within your particular field.
  5. They give you access to an entire finance team. Many fractional CFOs work as part of larger accounting firms where they have access to experts in accounting, payroll, taxes, and other areas of finance that your business will eventually need help with. Having an existing relationship with someone like that means you won’t have to spend time searching for other finance professionals later.

(These are from a post we did recently on “5 Ways CFO Consulting Services Can Help You Grow Your Business”. Take a look if you want to learn more.)

Interim CFO Services

Another way outsourced CFOs are helping small businesses is through “Interim CFO Services.” In this role, they sign on to a short-term contract to provide financial advice and planning for the company’s leadership. 

This usually occurs when a CFO has recently left or the business is going through a transition such as a merger or buyout. Even though other circumstances may change, the need for strategic financial wisdom never does. It actually may be more crucial than ever in those situations. 

Paro.ai gives these 5 benefits of an interim CFO in their article “How Interim CFO Services Deliver Long-Term Benefits.”

  1. Testing – It allows ownership to find out if the company is ready for a CFO without making a big commitment.
  2. Bandwidth – They free owners up to focus on other areas of the business that may need their attention.
  3. Expertise – As we mentioned above, they usually come with years of experience in a wide range of industries.
  4. Objectivity – As an outsider who isn’t emotionally invested in the company, they are able to provide unbiased advice you might not get otherwise.
  5. Speed – These temporary roles can be filled quickly, which is important when your company finds itself in a transition or crisis situation.

Signs You Need Fractional CFO Services

So how do you know when it’s time to hire a fractional CFO for your small business? There are lots of reasons you may need one, but here are 5 signs you shouldn’t ignore. 

1. Your business is growing quickly.

If you have been experiencing rapid growth, you need to prepare for a future financial situation that is significantly different than the one you’ve known this far.

You may have been able to manage a budget of several hundred thousand dollars just fine by yourself. But when your business starts making millions (and you start adding several employees), you need someone else to handle your finances.

2. Your business is expanding into new markets.

Your company may have specialized in one particular product or service up to this point, but whenever you expand into new areas you add complication to your business.

A CFO is not only able to help manage your finances; they bring a wealth of business expertise as well. Having someone on the team who can help you navigate new territory will save you time and money in the long run.

3. Your business needs to raise a lot of money.

As you grow, so does your need for capital. You might need to purchase expensive equipment or build a larger facility.

In those situations, you’ll want to make sure that your financials are in order since lenders and investors will be looking to see if your business has its act together or not. A CFO can help you get the money you need.

4. Your business is making money, but not much profit.

Bringing in lots of revenue isn’t the only key to running a successful business. Keeping as much as possible is what counts. 

If sales are up, but profits are low a CFO can help you find where your financial problems are before they cause too much damage.

5. Your business is full of reports you just don’t understand.

More than likely, the business you’re in isn’t based on reading financial reports. Whatever product or service you deliver demands enough of your time and attention that interpreting complicated financial reports can be overwhelming.

Having a dedicated CFO help you understand the wide range of reports your business produces can bring you tremendous peace of mind. 

(Read more at a post we did on “Is Your Business Ready For A Part-Time CFO?”)

CFO services for small business

Win Big With Virtual CFO Services

Don’t wait too late and miss the warning signs that your business is ready for a fractional/virtual CFO.

You no longer need a full-time person with a 6-figure salary sitting in a corner office with mahogany panels on the wall in order to get all the benefits of a CFO. You can grow your business with a fractional CFO, and our team of business and financial experts can show you how. We’ve been helping small business owners just like you for over 40 years now. Schedule a call today to learn more.

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