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Five Benefits of Hiring a Fractional CFO

What is a fractional CFO? Everything you need to know.

What is a fractional CFO? Everything you need to know

Strong bookkeeping is a wonderful and necessary component of building a successful business. Bookkeepers provide accurate and timely financial information to business owners and other key decision makers within organizations.

However, bookkeeping has limitations to its impact. Bookkeeping can be thought of as “keeping score”. How’d we do last month, quarter, or year? That’s all great information to know, but how does a business take that information and use it most effectively to make strategic decisions?

That’s where a CFO comes into play.  Peeling the business back, layer-by-layer, to uncover what truly moves the needle, one way or the other, in terms of profitability. They are there to be the strategic leader atop the finance department, giving expert advice to some of business’ toughest questions.

  • Do we have the right growth strategy in place?
  • What are the Key Performance Indicators (KPIs) we should be focusing on?
  • Do we have enough cash on hand to endure an economic downturn?
  • Are we right sized from a personnel stand point?

A high-quality CFO can answer not only these, but many other difficult business questions that go beyond the scope of this article. But what many business owners may not know is that there is an option outside of hiring a full-time CFO. An affordable alternative that many start-ups and small businesses are turning to instead is hiring a “Fractional CFO”. As the name suggests, a Fractional CFO is an experienced finance expert who provides CFO services to organizations on a part-time basis. 

Below we will be exploring five of the many benefits that come along with engaging a Fractional CFO to help businesses grow and reach its goals. We will also help you answer the question of whether your business is ready to hire a Fractional CFO.

1. Cost Effective

Having a high-quality CFO is vital for most businesses. However, that high-quality skillset comes with a steep price. Did you know that the average CFO compensation is nearly $400,000? That’s simply not in the budget for the majority of start-ups or small businesses. However, having that high-quality expertise is invaluable to the organizations as they seek to grow and navigate the challenges that come along with running a successful business. 

This is why so many businesses are opting to outsource the CFO position to a fractional CFO model. As the business grows, the level of involvement of the Fractional CFO scales right along with it. Always having the level of involvement needed for the business at each stage, thus allowing the business to grow efficiently without a huge impact to the bottom line.

2. Improved Profitability

Fractional CFO’s are experts in their field. Having worked with many businesses across several industries, they’ve likely encountered situations similar to your’s before. They’re able to draw on this past experience and apply it to your business, frequently resulting in success. In fact, many businesses actually see a net-reduction in costs from bringing on a fractional CFO due to the identified cost savings or profitability enhancements that may have otherwise gone unnoticed.

3. Stakeholder Confidence

Potential investors, lenders, and creditors will most certainly react positively to learning that your company has a quality CFO at the helm. This becomes especially important when your business needs funding, or when positioning the company for sale. 

Similarly, the majority of the time, these situations are new to the business owner and bring many foreign concepts along with it. Having a professional on your team who’s been there before to help you navigate these transactions will not only save you money, but give you peace of mind that the situation is being handled appropriately.

4. Better Decision Making

Challenging questions impacting the organizational direction need answered continually within businesses, and it’s best to have an expert on your team equipped to provide you with the right answers. 

  • Should we discontinue this product line?
  • Are there ways we can improve our margins?
  • Is our marketing spend aligned with our growth strategy?
  • What’s the payback period on this capital investment?
A Fractional CFO can improve the decision making process by bringing facts, being direct, and posing the right questions at the right time.

Another benefit to the business owner is the fresh perspective and insights brought by the CFO. A strong CFO is not only a finance expert, but can also serve as a sounding board to the entrepreneur.

5. Clear Roadmap

No one has a crystal ball to predict the future, but a strong Fractional CFO will get you as close as possible! By continually analyzing historical financial information to identify trends and spot areas for improvement, a Fractional CFO will help your business better prepare for the future and implement corrective action, quickly, when necessary.

Ready to Hire a Fractional CFO?

Each business is different, and we don’t believe in a one-size-fits-all approach. This is why we offer Fractional CFO packages that fit the needs of your business both today and tomorrow. 

Check out our CFO Services page or schedule a consultation to speak with one of our finance experts to find out more ways one of our Fractional CFOs can help your business grow.

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