Most small businesses don’t have a CFO on staff. It is likely not in their budget, or the owner may not see a need. Their accounting staff may be providing all that they think they need to be successful.
What owners don’t know , however, is what they don’t know. The lack of strategic focus is actually costing them growth.
A good CFO provides financial information and coordinates that with operations and strategy. The result is an organization that can focus on the best path for growth, profit and excellence. The CFO also frees up the CEO to focus on what they do best.
When to consider an outsource a CFO?
Outsourced CFOs can be helpful to add expertise on a project. They can evaluate the skills of your staff in the department, or prepare the company for a merger, acquisition or sale. Overall, they can help the company through a particularly challenging time and excel, despite the challenges.
When a company is growing, it can find that its working capital (cash flow) is shrinking. An experienced financial executive can monitor cash and introduce financing options and other ways of operating that require less capital.
Owners typically understand their businesses, but can benefit from the input of a CFO who can take responsibility for the financial and administrative aspects of your business. And an outsourced CFO is not as expensive as you would think. They are a fraction of what a full-time CFO would cost and often have greater breadth and depth of knowledge than the typical small business can attract in a hire This multiplies the ROI of your spend.
What arrangements should companies make with their outsourced CFO?
Every company is different. Even similar-sized companies in same industries have vast differences. A CFO can come into your unique situation and provide fresh eyes and context to provide insights into your distinctive business process. The CFO can also provide structure by way of monthly financial performance/review meetings, developing a budget and a strategic plan.
Outsourced CFO’s are not employees. Therefore, they have a unique relationship with the CEO as he/she can operate more as a business partner than a subordinate. The ability to have frank discussions around profit, compensation, exit strategy as well as the CEO’s blind spots can all prove to be hugely productive.
Ultimately, the CEO and CFO need to develop a plan for the CFO’s contribution during the engagement. Companies may have a specific project or a role for this time. All of this would be outlined in the initial proposal, capturing in reasonable detail the role and scope of work for the given time period.
In moving the business forward, the CEO needs the help of a team. That help is provided primarily by the employee base. However, often times the business of growing the company can best be guided and supported by an outsourced CFO. If you are interested in discussing how a CFO might help you lead your organization to greater results, reach out to us by Email or Phone: 443-501-2201.