Good to Great: How to Scale With an Outsourced CFO

Can your small business currently do these things?

• Access the company’s financial performance
• Benchmark performance to industry standards
• Make revenue-producing decisions
• Operate according to a budget
• Analyse variances between your budget and actual performance
• Prepare financial forecasts for shareholders and lenders
• Make strategic decisions based on accurate financial data

If not, you may need to hire a CFO.

“But we’re not large enough to justify the expense of a CFO,” you may say. “We already have a bookkeeper.”

Bookkeeping is essential. But CFO services extend way beyond keeping track of dollars and cents. A good CFO makes a significant difference in your profitability and cash flow. A chief executive officer is a proactive team member who helps crunch numbers in a way that facilitates strategic decision making. And a small business’s secret to success may be in accessing CFO services on a scaled basis.

 

The Role of a CFO in Small Businesses

Too often, people associate CFOs with enterprise-sized firms. More substantial businesses typically employ a full-time CFO to handle the tasks mentioned above. Small business owners, however, can also take advantage of these services by hiring a CFO on a part-time basis. With a more in-depth insight into their company’s data and numbers, they’re positioned to make strategic decisions and leverage opportunities as they come.

Your part-time CFO can also help to update the way you track and maintain your company’s financial gears. With cloud-based accounting and tools for sorting big data, you’ll have more information about your operations than ever before. 

 

What are the 6 Main Advantages of Hiring a CFO for a Small Business?

 

1. Smooth Out Your Cash Flow

According to the Australian Bureau of Statistics, more than 60 per cent of small business startups fail within the first three years. The main reason? They lose control of their cash flow. 

Cash is the lifeblood of a small business. Cash flow must be monitored proactively and planned religiously. Once you hit a cash crunch, it’s too late to make adjustments and tinker with timing. Your business needs an accurate cash flow forecast for working capital in the short term as well as the longer term.

Your part-time CFO can iron out the wrinkles in your cash flow and put systems in place to safeguard it from storms that may arise.

 

2. Create Budgets and Financial Forecasts

Most business owners find themselves too busy with day-to-day operations to prepare budgets and financial forecasts. In the long run, this lack of attention to the future can cause you to miss opportunities and fail to reach long-term goals. 

You can’t improve what you don’t measure. If you don’t set budgets and key performance indicators for your small business, you’re essentially flying blind without navigation. 

While you handle your operations, the CFO will dive deeply into your business financials, isolating pain points and enabling course corrections where necessary. With accurate budgets and financial forecasts, you’ll navigate a straight course to your goals. 

 

3. Boost Your Profits

Most small businesses already run a Profit and Loss report and rely on it for making month-on-month comparisons. But do you know if your report is accurate? Do you have time to reconcile it? Can you predict if your profits will disappear next month?

A CFO can help you benchmark for profits and financials using industry averages and standards. Often, businesses see a return quickly by reducing wasteful expenditures after a CFO has identified areas of improvement.

 

4. Reduce Your Risks

Regardless of the industry, all businesses face risks such as bankruptcy, market downturns, reduced profits, and unpredictability (as we’ve recently seen with COVID-19). All of these factors have serious implications for your company’s financial health.

Your CFO will get to know your business and help put strategies in place to manage your business risks in a holistic, proactive way. From insurance to business succession planning, you can safeguard your business from the unexpected. 

 

5. Enhance Your Company’s Value

At some point, you’ll exit your business, and you’ll probably sell it or turn it over to a family member or colleague. Have you wondered how much your business is worth?

Most small business owners can’t put a dollar amount on their companies, but it’s essential to know its value. Without this information, it’s challenging to plan for your retirement. 

A CFO can work with you to proactively improve the value of your business so that, when you’re ready, you can sell it for more than it’s currently worth. 

 

6. Redesign Your Organisation and Structure

If you’re like many small business owners, you started small and grew over time. But at some point, small businesses need a bit more structure, and employees need more direction and guidance. 

A CFO can help you understand the pros and cons of different organisational designs. People are the lifeblood of any business, and with the right structure, they’ll be motivated, knowledgeable and equipped to succeed. 

If you’re not ready for an in-house, full-time CFO, talk to one of our business experts about CFO services that are perfectly scaled to your current needs. You don’t have to be a large corporation to enjoy the immeasurable benefits of a chief financial officer. Set up a consultation with us at Altus to move forward with your business’s future today.