Many small businesses do well with the services of a bookkeeper or controller, but eventually many find it necessary to expand by bringing in a CFO. While accountants, bookkeepers, and controllers have their place, CFOs help with different things – like by offering actionable insights into how your business is faring financially.
If you’re unsure if this step is right for you, consider the following pros and cons to help you answer the question: "When do I need a CFO?"
Pro: Better Opportunities
Many business owners think hiring a CFO is a too-expensive proposition (and it can be), but if you’re losing profit opportunities or overspending because you don’t have a detailed grasp of your finances, the benefit outweighs the cost.
A common tipping point for businesses is when they discover that the crucial financial information they need to make strategic decisions isn’t being reported correctly. CPAs, bookkeepers, and controllers are acceptable when you’re only concerned with managing payroll, accounts payable, and accounts receivable, but a CFO is a necessity during times of growth that require a firm grasp of the relevant financial information.
Pro: Better Decisions
If you find your business on an upswing, don’t wait until you’re ready to pull the trigger to hire a CFO – businesses that delay bringing a CFO on board miss valuable opportunities to get help structuring before a merger, acquisition, or IPO. Hiring a CFO on time will help you adjust to changes faster, including increasing in scale as you get new customers, partners, and distribution channels.
In addition to scaling for new customers, partners, and distribution channels, growth also leads to the need to expand systems, such HR and payroll, inventory management, and procurement as well as additional capital or financing support investments and staff – more things a CFO can help with.
The drawback to hiring a full-time CFO is the expense. According to the salary experts at PayScale, the median cost of hiring a full-time, experienced CFO can be upwards of $300,000 per year when you consider salary, benefits, and bonuses. Because of this, many business owners decide they can’t afford a CFO and simply continue as they are – a mistake that will stunt growth.
Solution: An Outsourced CFO
There’s an alternative to hiring a full-time CFO, however: partnering with an outsourced CFO. Outsourced CFOs work on a contractual basis, and because they’re working with your business as consultants, you don’t have to offer health insurance, bonuses, or PTO – and you don’t have to use them full-time, either.
If you’re ready to hire a CFO but don’t want the expense of hiring an employee, get in touch with us today. We can help!