All companies, big or small, face many of the same strategic issues. Consequently, all companies have many of the same needs, including the type of analysis that a CFO can provide. For small companies that simply can't afford a full-time CFO, a part-time CFO is a solution to consider.
Business Analysis. All companies should analyze their business on a regular basis. However, many business owners are so caught up in the day-to-day obligations of running their business that they never get the opportunity to think strategically. Having a financial expert involved who knows how to read financial numbers, gather and interpret data, and then communicate to you what the numbers are saying about your business can add tremendous value.
Creative Insight. A good CFO consultant should be able to add value right away simply by asking questions about your business that cause you to think about your business in a new way.
Experience and Knowledge. A CFO Consultant should be able to use the knowledge they have gained from working with other companies both to figure out what questions to ask and to figure out how to answer them. This goes well beyond financial numbers. CFOs get involved in all parts of the business, so you should expect a CFO consultant to get involved in your sales process, your operations, your human resources, etc.
Benchmarking. Most small business owners would be hard pressed to compare the operations of their own organization to that of others. A CFO consultant can help with this.
Pay for What You Get. Hiring a Part-time CFOs allows you to only pay services on an "as needed" basis. You only pay them when they are working, and the hours can go up and down according to your needs. Also, if your part-time CFO isn't adding value, it is easier to get rid of them than it is to fire an employee.
Get More Than You Pay For. If you're paying by the hour, then you're not paying for all the time your part-time CFO spends thinking about your business at night, on the golf course, in the shower, etc. At Assured Ventures, LLC, we only work with a few customers at a time so we can think about your business all the time.
Steer your organization in the right direction financially
A dynamic new service has emerged over the past few years that allow companies to hire seasoned executives on a part-time basis instead of hiring a full-time employee. The ability for companies to “rent” a seasoned Chief Financial Officer is an alternative to hiring a full-time employee that otherwise would require an annual salary of $100,000 to $250,000, not including taxes, bonus and benefits. These professionals typically serve companies with sales from $2 to $50 million.
More time for the owner to spend with customers or in improving the company’s future. This is called a “finding” activity. A company, if it is to compete successfully, must have the owner spending most of his or her time with current and future customers. There are several “facts of life” that do not vary with time. One of these facts of life is that someone is spending time with your current and future customer today. If not you, it may be your competition.
Better financial information for key decision making. Most closely held companies have erroneous financial statements. It is dangerous for an owner of a company to make decisions, such as hiring new people, buying new computer systems, spending money on advertising campaigns, etc., if the financial information the owner is using is inaccurate. Bad financial information typically results in bad decisions. Bad decisions can kill companies. An experienced part-time CFO will have the skills necessary to help the company get correct financial information. This professional should also be a sounding board for key decision making.
A theft deterrent. It is shocking to see how many employees steal from employers. Many of the people that steal are in the accounting department. There is theft of money, inventory, customer lists, intellectual property and other company assets. A seasoned part-time CFO who visits the company’s office a few times each month will not only help establish tighter controls to deter theft, but their very presence should help decrease theft from company employees.
More money from the bank and from vendors. Bankers and vendors are more sophisticated than ever. They are looking for financial statements that look professional, that are issued in accordance with GAAP (Generally Accepted Accounting Principles) and that easily show the company’s key ratios. An experienced part-time CFO will be able to not only present the company’s financial information in a professional manner, but will be able to assist the owner with opening doors to banks and better vendor terms.
Training for the company’s accounting staff. It is in the best interest of the company to have its accounting staff become better in accounting knowledge and procedures. A good part-time CFO will be a seasoned executive who mentors the accounting staff to do a better job.
Pay for what you use. Many companies need the services of a CFO, but in the current economy cannot afford the cost of hiring another body. Businesses use a payroll service or outsource their network function for the same reason.
Your professional should have more than 15 years of experience. Make sure the part-time CFO is supported by a national organization that has the resources to be able to give your part-time CFO the support they need.
A CFO is a proactive professional who has a pervasive knowledge of things important for you to run your company properly. They will have the ability to address HR issues, sales and marketing issues and a host of things needed to help your company succeed.
What to Expect
Relationships should be based on trust, mutual respect and a reliance upon excellent services rendered. Walk away from the situation if an organization is not competent enough to perform these services without a large retainer.
Avoid any offer that might require your company to pay a return on profits. The money the company earns belongs to the owners, not outside people.
Finally, the advantages to hiring a part-time CFO include: (1) accurate and timely in-house financial statements, (2) the origination of solutions to your company’s problems, (3) financial and goal clarity, (4) a sounding board for the owner’s key decisions, and (5) you will begin to find more time to spend in entrepreneurial activities.