If you are a 7-figure business owner, and you think you’re too small for a CFO – think again.
Large corporations have a highly paid CFO for a reason. Generally speaking, small companies who lack the knowledge and expertise of a CFO are vulnerable to financial problems; they also face problems with stagnancy. Some entrepreneurs have no oversight into how their business is really doing financially. Other entrepreneurs face decision paralysis, and feel insecure when making strategic decisions such as hiring and expanding. Finally, entrepreneurs run out of cash and can’t finance their inventory.
So here’s the thing: as your company grows, there comes a point where you need to have someone who can steer you in the right direction when it comes to finances. Assuming you’ve kept your team lean all this while, though, you might find it painful to fork out over ten thousand dollars each month, and get a full-time CFO on board. That’s where virtual CFOs come into the picture!
What is a virtual CFO?
In a nutshell, a virtual CFO is someone who manages your finances on a part-time, remote basis. If you’ve heard of the terms “remote CFO”, “part-time CFO”, or “fractional CFO”, these refer to exactly the same thing.
Virtual CFOs are the perfect fit for SMEs who are making the transition from a small, local business to a larger, more professional company. These companies need to tap on a CFO’s expertise in order to take their business to the next level, but they might not have the means to bring a full-time CFO on board. Instead of committing to a full-time hire (and incurring additional expenses relating to benefits and taxes), these companies can simply hire virtual CFOs on a retainer basis.
How A Virtual CFO Adds Value To Your Team
At the heart of it all, the role of your virtual CFO is to guide you to run your business better, and help you take control of your finances. They’ll do this by benchmarking your company’s financial performance, as well as providing recommendations on how your company can cut cost and generate more revenue. Here are the various ways in which you can expect your virtual CFO to contribute to your company:
First and foremost, your virtual CFO will help you define and measure your key metrics. If you haven’t already done so, your virtual CFO will come up with Standard Operating Procedures (SOPs) on how these key metrics should be measured and reported. This is a crucial first step; without taking this step, you won’t have the insights you need to improve your company’s performance.
Next, your virtual CFO will also guide you in budgeting and cash flow planning. Now, the goal here is to give yourself enough leeway such that you can capitalize on any opportunities that emerge in the future. It’s a fine balance you’ll have to strike; you don’t want to miss out on sales because you have too little inventory, but you also don’t want to tie up all your cash in inventory that may takes months to sell.
Last but not least, your virtual CFO will also take on the role of a business partner and help you in business model evaluation, strategy development, corporate finance, and even fundraising.
Here, you can expect your virtual CFO to develop data-driven insights and scenarios in order to support decision making. If your business isn’t taking off as much as you expected, your virtual CFO can also do a deep-dive, and identify the key challenges that you’re facing. On top of that, your virtual CFO will utilize their asset management capabilities to allocate your company’s resources in the most optimal way.
Where fundraising is concerned, it also helps to have a virtual CFO on your team. If you’re seeking funding, you need to make sure that your forecasts and financial targets are sound — and that’s where your virtual CFO comes in. If you’re new to fundraising, your virtual CFO can also walk you through the process, and give you tips on how to show potential investors the potential of your company.
Growing your company with a Virtual CFO
At the end of the day, bringing a virtual CFO on board will give you the insights that you need in order to make better decisions without the cost of a full time CFO. This in turn helps you generate more profits, grow faster, and feel more in control of your business’s trajectory.
Think of a virtual CFO as a coach who will guide you along, and push you to build real value into your company. Regardless of whether your objective is to hit $1,000,000 in revenue in two years or expand to 5 new markets in the region, your virtual CFO can put you on the path to achieving that goal.
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