Should You Hire a CFO To Grow Your Business Faster

Should You Hire a CFO To Grow Your Business Faster

Growing startups require entrepreneurs to become actively involved in almost all business facets. As an entrepreneur, you are responsible for developing your business’ go-to-market strategy, bringing in the required investment capital, and managing your employees. At the same time, you are expected to come up with a feasible financial plan and keep track of financial reports to enable you break-even fast.

Many entrepreneurs and company founders take on the task of personally managing their financial books in a bid to save cost. However as the business grows, they hire bookkeepers and accounting managers who at best will only help out with payroll and tax planning. Further growth leads to complex financial reporting requirements; therefore, a full-time controller is brought in to maintain the business’ ledger, bank accounts, and oversee all accounting practices.

However, for your business to grow faster, you need a good CFO who will take responsibility for accounting, budgets, and financial analysis. They will also oversee insurance, real estate, banking, accounts receivable, and other legal issues.

Why Hire a CFO?

A CFO refines and understands your business model, maintains your banking relationships, works with banks and investors to acquire financing, prepares detailed management and financial reports, and sets policies around the business’ payroll and controls. Other duties of a CFO include budgeting and forecasting, working with auditors, dealing with mergers and acquisitions, and handling any compliance issues that may arise.

The work of a CFO cannot be done by a controller much less an accounting manager. It is important to note your business’ tipping point to maintain growth and development. A CFO is needed if your business is growing fast, has many employees, and offers multiple product lines. This is because a CFO works with you to understand the key drivers for your business’ performance. They pick up on any signals that indicate a potential problem and help you make informed decisions down the line.

It is normal to worry about the direction of your business, where your next higher-margin client will come from, your break-even point, and whether your cash flow will take a turn for the better. However, as the owner of a growing business who wears all the management hats, it is hard to step away from daily operations to look at the bigger picture for your business. Hence, the need to bring in a CFO.

When is it Time to Hire a CFO?

Many entrepreneurs battle with anxiety once their businesses start growing. It is a common symptom especially among business owners without a solid grasp of their company’s financial picture. More often than not, anxiety becomes fear, which leads to many bad decisions that hinder growth. Although hiring a CFO is important, it is equally as important to know when to hire one.

The Top Five Factors to Consider before Hiring a CFO

  1. Complexity

If you only produce a single product for a handful of clients, your finances should be relatively easy to navigate. However, if your business model and operational structures are complex, a CFO will help you identify inefficiencies and improve your bottom line. For example, a CFO will help manage your supply chain leading to lower operational costs. They can also help with stakeholder management especially when it comes to reporting your financial performance and building trust.

  1. Size

Even if you have a simple operational structure, a large company makes it difficult to manage payrolls, tax implications, and revenue streams without a CFO.

  1. Trajectory

When your business is growing at a breakneck speed, a CFO is essential for responding to a rapidly changing financial landscape. When starting your business, you know most of your suppliers and customers personally, which allows you to gauge your performance using regular dialogue.

However, as the business grows, the management transitions from qualitative to quantitative information. As a result, it is essential to delegate responsibility to your CFO and trust their decisions.

  1. Experience

A fast growing business needs a team with appropriate insight into data analytics and financial strategy. Potential investors often have high standards when it comes to a business’ future financial plans. Therefore, if you cannot implement an actionable financial plan, you need to hire an expert in the field.

  1. Outsourcing

Sometimes it is possible that you might require a financial expert but in a part-time capacity. The financial market has many professionals who offer their services when needed. These fractional CFOs provide the targeted financial support you need, at an affordable cost.

Whether your company is starting out or growing fast, you need to assess your finance and accounting status, your business needs, and growth plans. While all businesses are under pressure to be more efficient and save money, investing in a sound finance and accounting team can help you in both areas.

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