Why your business needs a CFO

When you are in business you want to be sure that you have surrounded yourself with a qualified team that will help you reach your business goals. Traditional corporate structures lay a good foundation for the types of team members you will want to work with. When your business needs strategic financial planning and leadership, it is time to bring on a CFO in the mix.

A Chief Financial Officer (CFO) is the most senior financial position in an organization.  There was a time when the CFO role was reserved for large, publicly traded companies, primarily due to the cost and commitment of hiring a full-time CFO. That is no longer the case.

Smaller and medium-sized businesses see the value that a CFO brings to the table and with the trend of fractional CFOs, they are able to bring on a CFO on a part-time basis. This offers small to medium-sized businesses the same benefits of having a growth strategist and financial guidance for the company without making the significant financial commitment of bringing on a CFO in-house.

The new trend in accounting is good news for smaller businesses that cannot afford to hire a full-time CFO on the payroll but still need strategic guidance and advice. Now that you know this is accessible for your business, there are many reasons you need to bring on a CFO in your business.

A qualified and experienced CFO brings many valuable skills to the table. A few value-added activities are offering valuable insight into increasing revenue, business growth strategies, cost control measures, capital acquisition, and tax-saving strategies, along with offering support and guidance to the Chief Executive Officer of the company.

How a CFO can help you in your business:

1. Create a financial forecast for your business
   Having a 12-month operating forecast is a must for your business, as it outlines your business goals for the upcoming year and gives your business a roadmap on how to achieve those goals.Not only is financial forecasting valuable, but a CFO can build out financial models and scenario analysis to ensure that you are making solid business decisions.  Are you confused about what makes the most intelligent and most profitable business decision? A CFO can help you work that out.
2. Holds the business accountable to its goals
   Your CFO will report your monthly financial results to you and track and report KPIs that are essential for your business. Through these critical business metrics, you will base your business decisions on, so ensuring that these are reported accurately and efficiently each month (at a minimum) will help your business be accountable to its goals. You will know how your company measures up against its goals through tracking. By measuring the performance of your business, you can identify issues through fluctuation in KPIs, and make changes to improve them before they become larger issues.
3. Offers a strategic partner in business
   Every CEO needs a sounding board, a trusted advisor, and a person who will look out for their blind spots. CFOs are highly trained and experienced and identify many growth strategies through trend analysis and reporting.If you have plans for high growth in your business, your CFO will plan out a strategy that safely manages growth so that you don’t overextend the company, run out of cash to fuel that growth, and ensure the longevity of your business.
4. Identifies opportunities and threats for your business
   Risk management is a crucial component of running a successful business. There will always be threats against your business, and mitigating those risks and threats is part of being a strategic business owner. A risk management strategy can be as simple as installing a sprinkler system should a fire start or as complex as creating an IT backup system to protect business data. Risk management strategies are also to develop policies and procedures for employees to follow and ensure financial data maintains its accuracy and integrity.A large part of risk management strategy is ensuring internal controls are set up to protect the company’s assets from theft and fraud.
5. Help you develop hiring plans
   You know you need to start building your team, but you have no idea if you can afford to. A CFO will plan that out for you, build financial models that show you what it will look like to bring new team members on.  You’ll understand how long it will take for new hires to start generating revenue and how it will affect your cash flow and impact your bottom line.

The bottom line is that there are many ways a CFO brings value to the table. As your company grows and the complexity of the business increases, it may feel impossible to keep up with demand. CFOs help plan that out and plans growth strategies that won’t put too much risk on the business or overleverage it. When you engage with a CFO you are working with a trusted, qualified strategic thinker who adds value to your company.

Written by Melissa Houston.