As a small business, one of the most important things that you have to manage is your finances. Because you are not working with as much capital as a larger enterprise, every dollar counts as you try to minimize your costs and maximize your revenue. This is why it’s a good idea to have a chief financial officer (CFO) on board.
At first, you may be thinking that it is impossible to afford a CFO because you don’t have the funds, but the fact is that you may be making things worse by not having one. Fortunately, you don’t have to pay a premium for the benefits of having a CFO, as long as you retain one for part-time work.
What Can a CFO Do?
First and foremost, if you are trying to manage your own finances to save some money, then you are doing yourself and the company a huge disservice. As a small business owner, you need to focus your attention on operations, marketing, sales, and management. There’s just not enough time to also handle your financial needs.
Even if you have an accountant doing things for you, a CFO will be able to take a huge load off of your mind and help you figure out the best way to make your business solvent. Here are some of the main reasons to have a CFO, even just part-time.
An accountant usually just handles your finances but doesn’t make any sweeping decisions regarding them. A CFO, on the other hand, can analyze your spending and see what could be done differently to minimize your costs. It’s having this level of experience that makes a CFO so valuable. Not only is he or she handling the money, but also managing it and helping you make it work more for your bottom line.
Too often, a new business is so focused on getting things up and running that having a set budget just isn’t feasible. If something needs to be done, you can either afford it or you can’t, and that’s that, right? Well, a CFO can help you by creating budgets and forecast models that will help you not only make sure that you’re not overspending on any aspect of your business but that you can save money for big ticket items or disaster if and when it strikes.
By crafting an efficient and effective budget, you can quickly turn your business around and make sure that you’re doing the most you can to succeed. It’s also an excellent way to see where things are going awry, since going over budget means that something is wrong.
Manage Cash Flow
Considering that this is the lifeblood of your business, it’s imperative that it’s handled correctly. You could be making tons of money and still be insolvent because your cash flow is not moving in the right direction.
A CFO will analyze your current situation and help stabilize things if there is a problem. So, if you’re not collecting payment from clients in a prompt manner, a CFO can help you spur your customers into action. If you are spending too much money as soon as you earn it, then your CFO can help you stem the outflow so that you can go through proper channels and make sure that you’re not overspending on anything.
Streamline Financial Operations
One problem that many small businesses have is that they are too spread out when it comes to money, and they aren’t paying attention to what is coming in and what’s going out. Simply put, there is no system in place for handling profits and losses so that you can clearly see what is happening and what can be improved.
A CFO will help you reign in this issue so that you can have a clear and direct path for every dollar that you earn and spend for your company. You should be able to track each dollar and where it goes, whether it’s towards payroll, business expenses, or profits.
If everything is currently in disarray and you cannot pinpoint where your money is at any given moment, a CFO will help implement a better strategy that will not only keep your company solvent but ensure that your operations are not all over the place.
Provide More Experience
Finally, if you can find a CFO that’s been in the business for a long time, one of the best benefits that you’re going to get is the fact that he or she is bringing that level of experience to your small company. This way, you can be ahead of your competitors by ensuring that you are doing everything correctly from the beginning, and not making it up as you go.
Overall, while the cost of bringing on a CFO (even part-time) may seem a bit daunting, you have to think of it as an investment in your company’s future. The rewards far outweigh the expense, and you can quickly elevate your business status to become even more successful.