What Is A Fractional CFO And Does My Business Need One?
In the US, there are approximately 30.7 million small businesses.
At the same time, they’re often considered the backbone of the US economy; as many as 66% face financial challenges.
Only about 25% of small businesses last more than fifteen years. Some cite a lack of market interest as their downfall.
Lack of capital and intense competition are also an issue.
About 17% say they struggled with a lack of personal business knowledge.
In essence, they simply didn’t have the business knowledge to protect their business.
A fractional CFO might have been helpful to those small businesses.
What is a fractional CFO, and how can they benefit a business?
Read on to learn more about fractional CFOs, what they do, and the advantages of hiring one for your business.
What Is a Fractional CFO?
Let’s start with an excellent understanding of what a fractional CFO does.
As their name suggests, the fractional CFO comes in to work with a startup or small business part-time or as a contractor.
They bring extensive financial knowledge and experience to the business that needs it.
But maybe the business doesn’t need a full-time person or can’t afford a full-time CFO yet.
The fractional CFO comes with years of CFO experience and brings that to the company.
Yet, they work for a fraction of the time of a full-time CFO.
This saves the company the expense of salary, benefits, and bonuses that a full-time CFO would need.
The business gets the knowledge and financial experience they need without all the costs.
Advantages of Hiring a Fractional CFO
There are a host of advantages to hiring a fractional CFO.
Let’s take a closer look at some of the benefits.
Experience
A fractional CFO isn’t just someone with business, accounting, or finance experience.
They are business professionals who bring actual CFO experience to the table.
They have already worked with multiple businesses over their careers, navigating the many facets of managing and growing a business.
They know how to manage and raise capital if that’s what a business needs.
Since fractional CFOs often work with multiple companies, you benefit from their diverse experiences.
They can navigate your immediate needs and help you look to the future.
Cost
Most startups or small businesses are accustomed to running with only what they need to survive.
In most cases, they can’t afford the costs of having a full-time, experienced CFO on the payroll.
A fractional CFO is either a part-time part of the company or someone who comes in when needed.
Many consider the fractional CFO like an on-demand employee.
They are called in when the need arises.
Flexibility
Many small businesses run into trouble when they find themselves with too many employees, especially ones with decision-making powers.
The small business might struggle with a differing vision, ethics, or business philosophy that can ultimately jeopardize the company.
A fractional CFO won’t impact a business in this way.
You hire someone who comes in to help with a specific request.
If the working relationship isn’t a good fit, you can quickly move on and hire a different person.
Focus
The fractional CFO handles specific duties and manages finances at your request.
This allows you to focus on other aspects of your business, probably more where your skills lie.
The CFO, in turn, can focus on your financial needs.
Whether you need to raise capital or consider a merger, the CFO can give you their financial experience, and you can focus on the other parts of your business’s needs.
Role of the Fractional CFO
The role of the fractional CFO goes well beyond bookkeeping and accounting.
Often a business will start with a bookkeeper, then seek some accounting services.
A fractional CFO will likely be more valuable in thinking and planning your business and its needs and looking to the future.
Let’s take a closer look at some of the roles a fractional CFO might take on for a small business.
Overcoming Business Challenges
Consider that many businesses lack the business acumen to handle their financial decisions.
It’s common for small and successful businesses to face challenges.
A fractional CFO can help a small business navigate those challenges, including:
- High expenses
- Cash flow issues
- Need for cost-cutting
- Low gross margins
- Outgrown existing systems
- Navigating an audit
The current team handling business matters may not have the needed skills to navigate how to solve these kinds of problems.
Growing Your Business
One key element of a successful business is looking to the future and business growth.
Some small business owners can’t see out into the future and the need for change because they’re so busy managing day-to-day responsibilities.
The fractional CFO comes with the business skills and vision to help a business figure out how to push forward to grow beyond where they are now.
Forward Facing Finances
Part of growing your business often involves taking a hard look at finances.
For many businesses that desire to grow, it also means finding ways to raise capital.
A successful business needs to look to the future and prepare for various scenarios.
The fractional CFO can help a business get its finances forward-facing.
Reaching Business Financial Goals
A business might have some specific financial goals it hopes to achieve.
Yet, the business owner or manager may lack the skills to achieve those goals.
From building strategic relationships, getting finances in order, and analyzing long-term contracts and relationships, the fractional CFO can help a business achieve those goals.
Hiring a Fractional CFO
What is a fractional CFO? This business expert is an opportunity for a small business to work with a seasoned financial guru on demand to achieve their financial goals.
When hiring a CFO isn’t realistic, a fractional CFO can bring the needed financial experiences and knowledge for less cost and as required.
If you’re interested in learning more about the services of a fractional CFO, we can help.
Contact us today to learn more about how this financial expert can help your small business.
Looking for controller services in Scottsdale, AZ? Explore the advantages of a Fractional CFO and unlock financial expertise tailored to your needs. At Master Accounting and Tax Service, we specialize in providing top-tier accounting, tax, bookkeeping, and fractional CFO / controller services at an affordable cost and with the utmost integrity. Call (480) 456-4999 or Contact us today!
Keep Reading:
Preparing to Hire a Bookkeeper: Comprehensive Checklist
Top 7 Tasks Bookkeepers Handle for Small Businesses
Fractional CFO VS. Fractional Controller Services: What’s the Difference?