Does My Company Need a CFO?

As you know, a CFO can add value to your company. They have the strategic mind to financially engineer plans to raise capital, provide leadership, create and implement systems and processes that will support your business growth.

However, before making the decision to hire a CFO, you’ll likely have plenty of questions: 

  • What exactly do they bring to the table? 
  • Is my business in the right position to make the hire? 
  • How deep do my pockets have to stretch to bring a CFO on board?

To bring some clarification to the decision-making process, we’ve answered some of the top questions for determining if your company needs a CFO.  

What Does a CFO Do?

A chief financial officer wears many hats and each comes with valuable benefits for a business.

Oversees All Things Financial

It goes without saying that a strong financial position is a necessity if you hope to have a successful business. Including a CFO in your team makes this possible. 

Their primary goal is to understand the ins and outs of your finances. Meaning when it comes to managing cash flow, creating budgets, leaning into financial forecasts, ensuring accurate reporting, and everything in between, a CFO will have it covered. 

Strategic Advising 

Not only will a CFO have a strong understanding of your finances, but they will also be able to offer experienced and data-backed advice to help your business make the right decisions. 

They’ll serve as a planner and map out strategies with your goals in mind. From there, a CFO will implement and track the progress of those strategies to ensure your business sees success. 

Apart from the more obvious financial strategies like improving profitability and building cash flow, CFOs offer strategic advising for:

  • Organizational changes like mergers, acquisitions, and IPOs.
  • Negotiating vendor contracts to ensure you are getting the best out of your money.
  • Building relationships outside of our organization but within the financial community like lenders and potential investors.

Building Infrastructure

Everything within your business requires a process. Whether it’s from a production, operational, or financial standpoint, you have (or should have) a system. 

One of the roles of a CFO is to create systems and processes that help your finances stay organized and on track. This could include anything from:

  • Implementing a new payroll software
  • Creating a new way to track your cash flow
  • Integrating a new bookkeeping system

The idea behind this work is that your business will be able to run much more smoothly and efficiently with the proper infrastructure in place. 

Building and Developing the Team

CFOs serve as the right-hand to upper-level management. They analyze everything from a financial perspective, which can be incredibly useful when building and developing a team. 

A CFOs insight can be helpful for determining:

  • If it is the right time to hire. 
  • Feasible salaries and benefits for employees.
  • Productivity and efficiency among current employees.

When Does My Business Need a CFO? 

Typically, rapid growth plays the largest role in determining if your business is CFO-ready. As you grow, the need for financial assistance and expertise increases.

For example, a growing business often runs into the need for capital. A CFO understands the process of valuing your business, meeting with investors, pitching the deal, and then creating a plan for properly utilizing the money. They provide all of the support you would need to secure funding for growth.

As mentioned, the faster your business grows, the more financial support you will need. Your:

  • Budgets will have to be more detailed.
  • Reporting will have to be more accurate and advanced.
  • Forecasts will have to predict a multitude of different situations.

Every area of your business’ finances will require more attention and expert-level analysis, something only a CFO can offer. 

Once new strategies are in place and your finances begin trending in the right direction, your entire team will need to be on board. For your success, it’s essential your team sticks to their budgets, understands their role from a financial standpoint, and reaches their assigned goals. A CFO serves as a financial leader, providing your team with the information they need to understand why they play an intricate role in your business’ success. 

What Does a CFO Cost?

When a business owner is weighing the pros and cons of hiring a CFO, cost typically sits front and center. However, there are two routes you can take when it comes to reaping the benefits of a CFO. 

Full-Time CFO

A full-time, in-house, CFO spends all of its time building strong finances for your business. As an employee of your company, you’ll be required to pay them a salary with equity and offer additional benefits. 

If you choose the full-time CFO route, you’ll be paying anywhere between $300K-$400k a year to receive all of the benefits above. 

Part-time/Outsourced CFO 

The second option is to hire a part-time/outsourced CFO. They will take time to understand your business and your goals. Even though they are not full-time, they still offer the same services and you will receive the same benefits.

When you work with a part-time/outsourced CFO, your monthly bill will range between $6K-$12K per month. Oftentimes, with this option, you can pick what level of service you’d like, which is why the prices vary. 

If you are interested in working with a part-time/outsourced CFO, consider New Economy. We offer lite CFO services which include strategic planning, capital raising, and financial modeling for forecasting and future visibility. Our goal is to help entrepreneurs gain financial clarity and make smart decisions. 

Schedule a consultation with us today to learn how we can help you get the most out of your business!