When Should You Hire a CFO

If you are considering whether it is time for your small business to hire a full time Chief Financial Officer, the answer is probably no. A CFO has a lot of expertise and training and can bring a lot to any business, but they are also expensive and have to be used efficiently. If you aren’t big enough, with enough revenue, it is likely to be a waste of your money and the CFO’s time. However, if you find yourself needing some in-depth analysis of your financial situation, some advice and direction, or periodic financial reviews there are alternatives to hiring a full time CFO.

Do I Need a Full Time CFO?

As discussed, your business does need to produce enough revenue to afford, and need, a full time CFO. As a small business, a good rule of thumb is that if your annual revenue is less than $20 to $25 million dollars you probably don’t need a full time CFO. As a small business, you will probably be better off with a part-time CFO as an adviser to work with your bookkeeper, accountant, and/or controller. You can contract for these services from outside firms. They will get the assistance you need to get the most strategic value from your CFO position.

On the other side of the equation, if your annual revenue is higher than $50 million you do need a CFO. But then, you aren’t really a “small business” in many aspects with that much revenue and resources. At this point if you find yourself dealing with complex scenarios and financial management and analysis is eating up more and more of your time, it is time to find that CFO.

Can I Afford A CFO?

A CFO can be relatively expensive depending on their experience, your business, and your location. Their compensation can exceed $200,000 annually and include other perquisites that go with such a position. You also have to be ready and willing to take and implement the advice of the CFO. This may require some organizational or systemic changes that can have their own associated expenses. In the end, the question you need to consider is whether you may already be spending the money you would pay your CFO in lost revenue, financial errors, lost opportunities, and other deficiencies a CFO could correct.

If you want to consider a less than full time CFO, or just get some financial coaching for your current staff, help is available through the use of outside CFO services from firms such as CustomOne CFO & Controllers. Their financial professionals can supplement and provide guidance to internal staff or help you find the part-time CFO you need.

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