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How to Decide if your Small Business Needs a CFO

While every business is different from one another, they all need someone capable of managing finances to keep the business afloat. 

At the inception of any business, this role may have been taken up by the owner or assigned to another employee at the company. 

But if your business is growing rapidly, underperforming, or going through some transitional changes, you might want to consider getting a CFO that can help you with your business strategy. 

Person setting out a business plan during a meeting
A CFO can help you develop strategies based on your financial activity.

What is a CFO? 

chief financial officer (CFO) is an executive who is in charge of overseeing the financial operations of a business. 

As a senior member of the management team, they can bridge the gap between day-to-day operations and the overall business strategy of a company. This is done by analysing financial data and offering key insights, which will help a business meet its goals and plan for the future. 

A 2018 McKinsey Global Survey found that 4 in 10 CFOs reported adding value to their company through strategic leadership and performance management in the past year. 

A CFO can be valuable to your business regardless of whether they come from a single or a variety of professional backgrounds, such as accounting, investment banking and treasury. 

With strong leadership and analytical skills, a CFO can fulfil a wide range of responsibilities and excel in their executive position. 

What responsibilities does a CFO have?

Looking at financial information so a business can prepare to make key decisions

A CFO is responsible for analysing financial data, such as cash flow and working capital, to offer key insights into how a business is functioning and where it needs to go. 

A lot of time is spent looking forward, towards the next quarter or even the next year. This perspective encourages business longevity as goals are planned and prepared by the CFO. 

Being aware of a wide range of concerns, from economic to government regulatory, helps a CFO introduce adjustments and lead key initiatives that propel the business forwards through uncertain periods. 

Nurturing relationships with investors, lenders and business partners 

One of the most important responsibilities a CFO has is interacting with people external to the company, ranging from banks to shareholders. 

With the knowledge acquired from analysing data, a CFO needs to communicate business performance and issues to the board of directors through detailed financial and management reports. 

These reports can also help when it comes to raising money from investors, with the CFO tasked with coming up with a plan that leads to eventual funding towards a business. 

Working closely with the CEO to develop a business strategy

As a CFO learns more and more about the business they work for, from overseeing financial operations to communicating financial reports to important stakeholders, it can be beneficial for them to help the CEO determine a business strategy. 

Specialising in financial processes and risk mitigation, a CFO can test, review and make changes to the business model being developed so that it can achieve the vision of a company.  

The oversight and planning that a CFO engages in means they are ready to support and challenge any decision a business makes. 

These are just some of the responsibilities a CFO has when working at a company. If you’re still hesitant to commit to a CFO, here are a few instances where a CFO will be beneficial for your business.

When Your Small Business Needs a CFO

During rapid growth 

The responsibilities that a CFO has means that they can help maintain the momentum of growth for your business. By looking at your company’s current financial position against market trends, a CFO can implement approaches that improve cash flow and profits. 

If part of your growth strategy involved acquiring more capital, then a CFO has the knowledge to interpret investment and technology opportunities that will help you in this process. 

With increased growth brings new risks that impact your business and your key customers, suppliers and employees. By hiring a CFO, they can manage these risks to protect the business during heightened periods of growth.

Dealing with lenders and outside investors, handling M&A 

Businesses that require extensive reporting of their finances to a lender, outside investors or a board of directors will benefit from having a CFO. 

Your business may be in the process of attracting outside funding. A CFO will interpret reports from due diligence and communicate findings to potential investors or lenders. Once onboard, a CFO will regularly update them on how the company is performing. 

A CFO can also be useful if your business is preparing to be acquired or considering an acquisition. For M&A, a CFO must evaluate the target acquisition by interpreting reports of financial and regulatory due diligence. By creating terms that tailor to these findings, the merger or acquisition can go ahead.

Developing new products or services 

If your business is beginning to deliver products or services to international markets, operations can get complex. To deal with the dramatic changes to product lines and transactions, a CFO can sort through invoices, as well as manage clients and vendors each month. 

In addition, a CFO can come up with a growth strategy that helps your business systematically expand offerings.

When profitability has consistently been at a low level

To help figure out why your business is not making profits at a desired level, a CFO will evaluate the productivity of employees and identify any other slowdowns in operations. 

This assessment will indicate what changes need to be made to boost net income. Having deliberated with important members of the company, a CFO will put these changes into action. By analysing better pricing strategies, controlling costs and improving productivity, the profitability of your business will grow over time. 

The range of services provided by a CFO means that they could be a valuable asset to a small company that finds itself in one or all of these situations. 

Two individuals making an informed decision
A CFO can help improve your businesses’ efficiency.

The bottom line

Much like larger organisations, smaller companies are having to constantly evolve their business model to navigate the demands of a rapidly changing business landscape. 

So when it comes to getting a CFO… 

  • If you need someone to take charge of finances and operations every day, then hiring a full-time, in-house CFO will be the next step for your business. 
  • A business that requires financial advice for an upcoming project or a few hours a quarter can benefit from CFO advisory services, currently being offered by Count
  • But if your business is in a position where it can handle the primary responsibilities of a CFO, then it might be worth waiting until a situation arises in which you need additional support. 

Whether you decide to get a CFO or not, the range of CFO options available to small business means that there is something out there that works for your business in the long term. 

Interested in CFO advisory services for your small business? Get in touch with our financial experts to find out more! 

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