How do I know if my business needs a CFO?

Sometimes it’s not easy for a small business owner to understand the role that a CFO plays in a growing business. They have a bookkeeper who performs the day-to-day transactions, entering invoices and paying bills, and they have a CPA who prepares the tax returns. But they lack the high-level financial strategy that a CFO brings to the table.

What does a CFO do?

While bookkeepers, controllers and CPA’s have responsibility for recording and reporting on historical financial transactions, the CFO is focused on the future. They assist with budgeting and forecasting to help you communicate growth goals and measure results.

They create financial and cash flow models that assist with planning for capital needs. Forward looking models allow you to see future cash shortages and plan for them.

A CFO will take responsibility for raising capital, obtaining bank financing, preparing for market expansion, mergers and acquisitions and exit planning.

In short, a CFO is a leader on the team, assisting the business owner by converting their vision into numbers and making sure the business has the capital it requires to perform.

When is the right time to hire a CFO?

When you are planning to grow. Growth is exciting and is one way to build value in a business, but it also requires cash. When your business is growing, you should have the financial leadership of a CFO who can assist with goal setting and planning to make sure that the business has the capital to fund that growth.
When your business requires increased financing there should be a CFO on the team to determine the appropriate source of financing, the timing of that financing, negotiating terms and rates, and preparing required reporting. A CFO is your best advocate with any lending source.
When you want to consider either growth through acquisition, or to start planning an exit strategy. A CFO will bring valuable insight into the financial impact of these decisions.

Having a CFO on the team brings an increased level of financial sophistication that will strengthen decision making and contribute to growth and profitability.