6 Great Reasons to Hire a Chief Financial Officer for Your Small Business
How easy do you find it to find time to perform the following business management tasks:
- Obtain information on the company’s financial performance.
- Compare your results to industry norms.
- Make revenue-generating strategic decisions.
- Plan ahead of time and stick to a budget.
- Examine any discrepancies between your budget and actual results.
- Prepare financial projections for investors and lenders.
- Make strategic judgments based on financial data that is accurate.
If you’re struggling to keep on top of these important duties, you could stand to benefit from recruiting a CFO.
Understandably, your first thought may be that you don’t have the revenues to justify engaging the services of a CFO, especially if you’re already funding a bookkeeper. The skills of a CFO, however, go much beyond keeping track of dollars and cents. A good CFO may make a big impact on your cash flow and profitability. A proactive team member, a chief executive officer helps crunch numbers in a way that enables strategic decision-making. And accessing CFO services on a scalable basis could be the key to a small business’s success.
The CFO’s Role in Small Businesses
CFOs are frequently associated with large companies. To accomplish the aforementioned tasks, larger companies often hire a full-time CFO. Small business owners, on the other hand, can benefit from these services by hiring a part-time CFO. With the help of a CFO, they’ll be better positioned to make strategic decisions and capitalise on opportunities as they arise now that they have a better understanding of their company’s data and numbers.
Your part-time CFO can also assist you in modernising the way you track and maintain the financial gears of your business. You’ll have more information about your operations at your fingertips than ever before, thanks to cloud-based accounting and tools for sifting huge data.
Top 6 Reasons to Hire a CFO for Your Small Business
- Make Your Cash Flow Smoother
More than 60% of small business ventures fail within the first three years, according to the Australian Bureau of Statistics. What is the key reason? They are unable to manage their cash flow.
A small business’s lifeblood is cash. Cash flow must be closely watched and meticulously planned. It’s too late to make adjustments and play with timing once you’ve encountered a cash constraint. Your company requires an accurate cash flow estimate for working capital in both the short and long term.
Your part-time CFO can smooth out the kinks in your cash flow and set up procedures to protect it against impending storms.
- Produce financial projections and budgets
The majority of business owners are too preoccupied with day-to-day operations to establish budgets and financial projections. In the long run, this lack of foresight can lead to missed chances and failure to achieve long-term objectives.
You can’t enhance something you don’t track. You’re practically flying blind without guidance if you don’t define budgets and key performance indicators for your small business.
While you focus on your operations, the CFO will delve into the financials of your company, identifying problems and allowing course changes as needed. With precise budgets and financial forecasts, you’ll be able to stay on track to meet your objectives.
- Increase your earnings
Most small businesses already have a Profit and Loss report that they use to compare month-to-month results. But how do you know if the information in your report is correct? Do you have time to make amends? Can you forecast whether your gains will vanish next month?
A CFO can assist you in establishing profit and financial benchmarks based on industry averages and standards. After a CFO has identified areas for improvement, firms often see a quick return by decreasing inefficient expenses.
- Minimise your risks
All firms, regardless of industry, face risks such as bankruptcy, market downturns, lower earnings, and unpredictability (as we recently saw with COVID-19). All of these elements have a significant impact on the financial health of your firm.
Your CFO will get to know your company and assist you in developing strategies to manage your risks in a holistic, proactive manner. You can protect your firm from the unexpected with everything from professional indemnity insurance to business succession planning.
- Increase the value of your business
You’ll eventually leave your company, and you’ll either sell it or hand it over to a family member or colleague. Have you ever wondered what your company is worth?
Although most small business owners are unable to put a monetary value on their businesses, it is critical to understand their worth. It’s difficult to plan for your retirement without this information.
A CFO can help you increase the value of your company ahead of time so that you can sell it for more than it’s now worth when the time comes.
- Restructure and reorganise your business
If you’re like many other small business owners, you began small and gradually expanded. Small enterprises, on the other hand, eventually require more structure, and employees require more direction and training.
A CFO can assist you in determining the benefits and drawbacks of various organisational structures. People are the heartbeat of every company, and with the correct structure in place, they will be motivated, knowledgeable, and well-equipped to thrive.
If you’re not quite in the place for a full-time CFO on staff, speak with one of our business experts about CFO services that are properly scaled to your present requirements. You don’t have to be a big company to reap the benefits of having a chief financial officer. Research your options today.