A business owner wears many hats. The old adage “chief cook and bottle washer” applies in many small businesses. The conventional thinking is that your business is your vision, and the only way to see it carried out is to do it all yourself. Another line of thinking is that because you enjoy handling any given aspect of the job, there is no need for someone else to do it.
Without help, you will only be able to do so many tasks. The tasks that need immediate attention will get done first, because they are the ones that are needed to keep the business running. The short, medium, and long range tasks will seldom, if ever, be completed. This is true if you are a freelance consultant, restaurant owner, manufacturer, or service provider. Most business owners are very good at hiring from the bottom up, but the breakout moment for a small business owner is when they hire or contract for upper management or senior level positions. One of these positions is a Chief Financial Officer (CFO).
A CFO is someone that is able to provide the CEO with the financial information to make the best decisions to further the vision of the business.
So when do you need one? Simply put, when you aren’t receiving the financial information to further the vision of the business. If you have a fear or realization that you’re missing out on achieving that vision, that’s a good sign that you may need a CFO.
When does that realization happen? Here are some things to look for:
- Your business isn’t growing month over month or year over year.
- Your tax return shows increased taxes without increased revenue.
- You aren’t able to capitalize on expanding your business in a growing market.
Once you determine that you need help, it’s time to seek it out. Each hire— whether that’s an employee, an advisor, or a consultant— should, at the very least, help you achieve these goals:
- Further your vision
- Free up your time
- Add value to your bottom line
If you think of a team member as someone that does each of those three items, you will see them less of a cost center and more of a profit center. A CFO is no different. A good CFO is an advisor, a consultant, a relationship builder, a problem solver, an advocate, a tax planner, a tax strategist, and someone that is held accountable by the CEO. An effective CFO has answers to the questions and problems that the CEO may not be aware of and provides that information on a timely basis.
The final part to the equation is knowing how much time and help your business needs. Do you need a full time CFO? A virtual/fractional CFO? According to Robert Half, the salary range for a CFO in Austin, TX is $132,162 to $542,002. If those amounts are cost-prohibitive for your business, a fractional CFO may better fit your organization’s budget. Engagements can be structured as flat hourly fees that usually run $100 to $150/hr, a percentage of revenue fees, or a combination of both.
In summary, every company is in business to accomplish the owner’s goals. As a business owner, you have a vision, and you want to share it with as many people as possible. It’s hard to accomplish that by personally working in every aspect of the business. You may need to work more on the business, which involves hiring the right people. In this case, that means hiring a CFO that provides you with timely information for you make decisions. Each hire should be viewed as a potential profit center and a way to expand your vision.