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Small Business Alternatives to Hiring a CFO

There is a range of instances in which a CFO can be beneficial for a small business. From rapid growth to dealing with outside investors, a CFO is equipped to deal with these situations.

But if your business needs cannot be fulfilled by a CFO, or hiring a CFO will be costly for your small business, it may be worth looking at alternative options. 

Before diving into these options, we need to consider the hierarchy of needs that shapes how you operate your business.

Maslow’s hierarchy of needs – a quick explanation: 

In psychology, Maslow’s hierarchy of needs is a five-tier model that illustrates the hierarchy of innate human needs. 

Basic needs such as food and shelter, which appear lower down the hierarchy, must be met in order to move up the pyramid and fulfil psychological and self-fulfilment needs. 

Maslow’s theory is centred on motivation as people choose to satisfy certain needs based on their current situation. These needs take precedence over others, and once fulfilled, individuals can move onto the next level.

Putting Maslow’s hierarchy of needs in a business context – the hierarchy of financial needs:

Businesses also have needs that must be fulfilled. Much like Maslow’s hierarchy of needs, the financial hierarchy of needs depicts a business model of financial management needs, which includes (from top to bottom): 

  • Strategic partnering – e.g. M&A, pricing/product strategy 
  • Financial planning – e.g. rolling forecasts, performance targets 
  • Trusted reporting – e.g. accrual accounting, tax reporting 
  • Record keeping – e.g. payroll, invoices 
  • Transacting – e.g. buying and selling goods or services, making and receiving payments 

Hiring an in-house CFO will only be necessary if your business needs appear at the uppermost levels – financial planning and strategic partnering. 

Whereas if your needs appear lower down the hierarchy, then it is best to satisfy these needs first in order to move onto the next level of business needs.

Here are some other roles that can help with your current financial needs:

For record keeping: bookkeeper and/or accountant

Record keeping involves correctly recording business transactions. This can be done by a bookkeeper or an accountant. 

bookkeeper is responsible for recording transactions such as bank balances and inventory. 

An accountant also records transactions but in addition, uses this information to create financial models based on the performance of a business. 

So while record keeping can be handled by a bookkeeper, it will be helpful to hire an accountant for more complex transactions. 

A person using a filing system
Hiring a bookkeeper can help you effectively mange your financial documents.

For trusted reporting: Accounting Manager and/or Controller

Once your transactional needs are being met, it’s time to report your business activity through trusted reporting. 

What’s important is that reports at this level shape different parts of the business, such as sales and customer service. So it is important to get an accounting manager or controller that can generate accurate reports that shape the direction of your business. 

An accounting manager is focused on overseeing the work done by accountants, compiling monthly financial information as part of documentation and compliance duties. 

controller is involved in managing the daily accounting operations of a business. They develop budgets, monitor accounting variables and create financial reports that give an overview of a company’s existing financial position. 

Both of these positions are supervisory roles, but if your business is looking for someone to interact with people inside the company, including accounting staff and heads from other departments, as well as deal with people outside the company, usually direct service providers like CPA firms, then a controller would be more appropriate for your company.

For financial planning: Vice President (VP) of Finance

With an accurate record of past financial activity, a business can use this information to develop financial forecasts. 

Rolling forecasting would be beneficial for companies with rapidly changing business models. Constant changes bring risk, and so frequent updates are needed to make sure your business plan is on track. 

To bridge the gap between the responsibilities of a Controller and CFO, it could be worth considering a hybrid role such as VP of Finance. 

VP of Finance is an upper-level executive in charge of overseeing all financial matters of a business, building strategies to maximise profits and plan for growth. 

Much like a CFO, a VP of Finance will be analysing financial data and advising a board of directors, as well as outside lenders and investors, on strategic decisions that will shape the future of the company. 

Hiring a VP of Finance for your business means you will soon be in a good position to get an in-house CFO to work full-time at your company. 

A person selecting the right option
A VP of Finance can help you identify strategies to maximise your profits.

Our final say

Getting a CFO does not have to be the end all be all for your business. 

By looking at the hierarchy of financial needs, you can look for someone that can satisfy the current needs of your business. 

But before you make your decision, take time to understand the responsibilities each type of finance role has and figure out which position can help you with your business goals, which are subject to change in the future. 

When the time is right, you should be able to select a position that best fits your needs and is affordable for your business.

Whatever your business needs are, Count is here to help. Just visit our website to discover the range of services on offer! 

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