Hiring a CFO sounds like a big step in business and a big investment. The truth is that it is a much bigger cost to your business not to have someone in your corner as you grow and scale. Between tax mistakes, leaking costs, and waiting too long to make decisions, this can pile up and be overwhelming. Most entrepreneurs wait to make this addition to the team because they never feel ready. It is usually because they are not ready to face their numbers.
So what exactly does a CFO do? A CFO takes bookkeeping and accounting data and acts as your financial arm to help you manage the business finances effectively. Many accountants provide outsourced CFO services but not all do. Some also provide bookkeeping and tax prep services and some do not. It is important to understand where the gaps may be in your business to know how to fill them.
A CFO frequently acts as the coordinator between the accountant, bookkeeper and tax preparer to make sure everyone is on the same page. Some firms (like us) offer all of this under one roof. No matter which type of professional you work with, you want to fully understand where their work starts and ends.
If you are thinking of hiring a CFO or know you want to in the future, here are some telltale signs that you should consider it soon:
You stopped at bookkeeping - This is the prerequisite to almost any value-add accounting or CFO service. Why? Because bookkeeping is the compiling of transactional data that forms information that financial professionals understand. Without solid bookkeeping, it is all one big guessing game. However, if you stop at just doing the books and thinks that checks the boxes, you are just scratching the surface of the potential to learn so much from your numbers.
You manage reactively - If you measure the financial health of your business mostly based on the balance of cash in the bank, that is managing reactively. Instead of looking at the money coming in and going out, you stay fixated on one temporary metric. A CFO helps you see forward and think in terms of forecasts and not feelings.
You can't bust a financial ceiling - Many business owners can achieve rapid growth, but scaling takes strategy. Scaling is all about optimizing your spending and creating efficiencies in your processes. You would be surprised how much a CFO helps with all of this. When you know where costs may be leaking or whether you can afford to hire someone new, you can take action in the direction of your goals.
Usually when a business owner feels stuck, there is some lack of clarity over their numbers and their goals. Think of a CFO like a trainer, there to hold you accountable and keep you on track to measuring your progress.
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