It’s a good sign if you’re considering hiring a fractional CFO. It shows that your business is growing and you need someone you can depend on to handle the financials of your company.
At this point, you have probably outgrown the limited services a bookkeeper can provide. Bookkeepers are great for recording and keeping track of your transactions: invoices, purchases, bills, etc. They’re knowledgeable about the financial data of your company, but they can only look at the past and your previous expenditures. In short, they can’t analyze your company’s financials to gain foresight into your future profits.
A fractional CFO zooms out and looks at the bigger picture. They make sure that the systems and people are in place to produce accurate financial information. This enables the business owner to make better decisions about their staff members, their products, and everyday logistics. While a bookkeeper looks at the past, a CFO looks to the future to help reach the company's goals.
Is it Time to Hire a Fractional CFO?
The best way to figure out if it’s time to hire a fractional CFO is to identify where you are in the Life Cycle of Business. Les Mckeown breaks up the Life Cycle of Business into these phases.
Phase 1: The Early Struggle
The first stage is when the visionary or entrepreneur has an idea but is stuck. He’s unable to figure out how to implement his idea.
Phase 2: Fun
The second phase is when your company actually starts making sales and you’re watching the magic happen. Your team is small, but you’re killing it, and things are happening.
Phase 3: White Water
This is exactly what it sounds like. You’re holding on for dear life and just trying to keep everyone in and stay alive. This is not because things are going horribly wrong, quite the opposite actually. You've got a lot of business, you're just not sure how to handle it all. During this phase, Business2Community says your challenges are increasing revenues, increasing customers, and effective management. This is a terrible place to live as a business and put a ton of stress on the team. The reason why this phase happens is because there aren't any processes, systems, or delegation in place.
If you resonate with this phase, it may be time to set up a free consultation call with Clarity Consulting! This is the perfect time to hire a fractional CFO to help you work on your business instead of in your business. They can help you see the bigger picture, establish key metrics, etc.
Still not sure if it’s time to hire a fractional CFO?
Entrepreneur.com suggests asking yourself these questions:
• Are you constantly worried about money and experiencing shortages?
• Are you trying to discern where your business is headed?
• Are you working overtime on tasks that are unrelated to growing the business, like determining what bills to pay?
• Are you concerned about the security of your business and its financials?
• Is your business struggling to hit appropriate margins and profits to finance its growth?
Starting your own business can feel absolutely crazy and daunting. You’re in the dark, and you have no idea what’s going on. You’re in survival mode, trying to keep your customers, employees, and yourself happy. On top of that, you’re in charge of daily logistics, and the intimidating task of financials.
A fractional CFO can be a flashlight in the darkness to entrepreneurs and young businesses. Like a CFO, a fractional CFO creates financial plans, strategies, and manages financial risks.
The Benefits of Hiring a Fractional CFO
A fractional CFO is the best investment you can make, and Smart Business says it is the most efficient way to fill a void in your business. Many young businesses would LOVE to be able to hire a CFO. By working with a CFO, you get experience early in your company which can help you establish better financial habits for greater sustainability and long-term success. A financial mistake for a small business is dire to its survival and sustainability, and truthfully, small businesses need the insight of a CFO more than an established company. As your business rapidly grows, you need to be able to make solid and informed decisions at the same pace and must be able to rely on data driven and timely information.
A Fractional CFO is the answer in that situation as you can access years of experience and solid financial advice without providing a salary, health benefits, and a 401k. You can bring on a financial partner without the overhead it would take to bring on a full-time CFO. Which will truly bring you this:
This amazing feeling of freedom!
A fractional CFO should be regarded as more than just an advisor to the CEO. Their role should be seen as a trusted business partner as they make data-driven decisions and push your company toward effective financial strategies.
This is something that a bookkeeper just can’t provide as they only look back and enter previous data. A fractional CFO is able to take the data and use it to project helpful predictions for your business. They look at your budget, your sales, your revenue, and thinking through every single month, they’re able to see if there are any cliffs up ahead. If there are any cliffs, a fractional CFO is able to help you make adjustments and help you make your business more profitable. A fractional CFO can provide intelligence on things to tackle and target. They are able to zoom out, look at the bigger picture and tell you where your best chance for success is—what your strongest month is, what your strongest product is thus helping you perpetuate tough financial calls. This frees up a ton of brain space for you and you can focus on growth and forward moving activity. If you’re needing someone to help you make sense of your financial data so that you can make decisions, set up a free consultation call with Clarity Consulting.
3. A Financial and Business Partner
More than being a numbers person, a fractional CFO drives growth and handles complex situations while controlling costs. Aside from reporting on financial performance, the fractional CFO can translate business strategy into financial strategies.
First and foremost, a fractional CFO is going to want to know what is going on with your business. They will want to establish a relationship with the owner and know what is troubling to him or her, but also they will also want to know what opportunities the owner sees for growth as. To keep your business on track, a fractional CFO will need to know the key issues your company is facing financially.
This enables your fractional CFO to implement business plans for the bigger picture of your company. Their ability to synergize strategy and finance empowers them to suggest healthy risks for your company. If you're looking for a financial partner with little overhead, set up your free consultation with Clarity Consulting today!
While this can often be overlooked, Forbes says this is one of the most crucial components of a fractional CFO. A fractional CFO is great at clarifying the confusion that your financials can be, which can help your company establish key metrics. They’re able to make assessments like, “It’s better when we sell this x product instead of y product, because when we sell x product, we get more customers and a higher profit margin.” This can be so helpful as your team grows with your business. Often times as businesses grow, teams grow into departments, communication breaks down, and your staff forgets what drives sales and growth. As your small business grows, your team will grow with it and begin to split into different divisions. A fractional CFO uses numbers and data to communicate the vision and performance, helping your staff sharply comprehend how their role specifically contributes to success. This keeps your employees aligned and working for a common purpose. In addition, they can use facts to demonstrate goals and progress to investors and other audiences.
Fractional CFO Services from Clarity Consulting
At Clarity Consulting, we know when one person doesn’t have a handle on all the areas, things fall through the cracks. Part time CFO services and Fractional CFO programs can open up a whole new world of operational efficiency. We know that seeing your numbers on a daily, weekly, monthly, quarterly rhythm alone can provide amazing opportunity for growth and profit in any business. Set up a free consultation with us today! We’ve worked with dozens of business owners to create a more black and white understanding of their financials. Instead of confusing and boring excel spreadsheets, we help create a clear picture of current financials and future projections.
In addition to financial control, we also provide administrative support for HR, insurance and taxes.
Once you’ve hired a new employee, Clarity Consulting is there to help with the onboarding process. We make sure they have filled out all their documents and get their direct deposit set up. If there is any admin related the employees need throughout employment, Clarity Consulting handles it, freeing up the business owner to focus on growth.
For insurance support, we help companies with their annual General Liability and Worker’s Comp audits by gathering all the certificates throughout the year and sending the payroll report to your auditor.
For tax support, we communicate with your CPA and make sure your CPA strategy is being implemented throughout the entire year.
Becca Harper is the founder of Clarity Consulting. If you’re a small business that's looking for a partner to bring more leadership, communication, and experience, set up your free consultation call with her team today!