Entrepreneurs have a wide range of skills but usually have certain areas of expertise they excel in. Consequently, they need to have trustworthy partners who they can be sure will handle the different things that the business needs handling, especially those that have to do with money.
At some point, every business will need the help of a finance chief. Whether the CFO advises on expansion, strategy, or risk, he or she is a provider of a service that goes far beyond number-crunching.
With the ability to take a comprehensive view of a company, the CFO decides among the key decision-makers who support both the short- and long-term goals of the company. The time for hiring a CFO has arrived for companies that are in any of the following situations:
Business Expansion
Regardless of the preferred route to business growth, the last thing you want to do is attempt the journey alone. Luckily, you will always have a CFO by your side to ensure that does not happen.
Whether your route to business growth is through acquisitions or organic growth, moving to a new market, or introducing a new product, a CFO’s input and expertise will be of utmost value.
They will explore the viability of a market and the profitability of a product launch while also assessing if the timing is right. A CFO’s skill in analyzing financial reports against present market conditions will guarantee that a business neither overestimates its ability to grow nor misses out on opportunities.
A finance chief will, in an ideal situation, act as a collaborator with you by leading the business through the expansion phase, at the same time making sure that the financial strategies put in place are in line with the final goal.
Cash Flow
The position of a CFO is crucial in managing cash flow is for all companies, regardless of their size. Richard Branson calls cash flow the “lifeblood” of business. If a company runs short of working capital, owners may find themselves in a situation where they have to choose between two bad options, e.g., not paying suppliers to cover payroll, which could lead to bigger problems.
The founder of the company is able to concentrate on the daily operational activities of the firm while the financial responsibility of the company is transferred to an expert in the area for payroll, product pricing, credit needs, supplier negotiations, and other areas.
Risk Assessment
The last thing you, as a business owner, want is to mismanage risk, since it could be very costly for you in many ways. CFOs are the ones who help the company to prevent losing its liquidity by doing their daily cash flow projections and thus preventing mismanagement of funds.
A CFO means you have someone navigating the ups and downs to ensure that your business has ample cash on hand to survive through any financial crisis, even a recession.
Stakeholder Communication
If you feel the need to manage relationships with different stakeholders in your business, whether it be investors, employees, partners, or suppliers, it is another indication that your business needs a CFO.
Numbers are the primary way CFOs see the business, but they can also see the big picture through analysis. Their communication reveals this high-level perspective that could greatly assist in building a strong relationship with the stakeholders.
Should your industry face such a situation, a CFO could play an enormous role in keeping your business alive. Not only will a professional in finance prevent your business from acquiring penalties or such extreme measures as closure at all, but he or she would also be the one to assist you in keeping compliance with the relevant regulations before any new reporting or accounting rules are actually applied in practice.
Conclusion
The question of whether your business is among the successful with the potential signaled already by the demand for scaling, or on the contrary has not yet achieved even the market penetration that it is capable of, the skill set of a CFO could very well be the factor that will allow you to achieve those goals the quickest and with the least possible expenditure of resources. The trend is increasing, and more and more businesses are adopting the fractional CFO model so that they can strategically exploit the know-how of an experienced financial executive whenever needed.
