When is it time to hire a CFO? I spoke to Tom Gentile, partner at part-time CFO firm BeaconCFO Plus in Cleveland, to find out. According to Tom, reaching a certain size is not the indicator. Situations cause the need for a CFO. Here are some he mentioned:
Spending too much time outside your area of expertise
When you think you need a bank loan and the bank asks for a forecast. You devote a couple days to put together the forecast because this is not your expertise. You find other priorities slipping when you focus is diverted. Now is the time to hire a CFO.
Having goals without a solid plan to achieve them
A CFO will tell you what machinery you will need, the size of the plant you need, and the number of people you will need to achieve your lofty goal.
Growing out of control
CFOs provide a Cash Flow Forecast and Margin Analysis to determine what cash you need to keep up with demand as well as if product is profitable. Both analyses are crucial for the health of your business.
What does the CFO do?
Per Tom Gentile: As a forward-thinking strategist, a CFO will help establish the long-term strategy and help execute upon it. The CFO puts the stones across the pond to your goal, helping you chart the best path to get to your desired result. With the help of a CFO, you start thinking of performance factors.
A CFO encourages establishing sound business practices to make sure that your company can weather a storm. They put in performance measurements to break bad habits. As a business owner, you may be losing site of the most important steps to get to your goal. A CFO will hold you accountable and as a result, your habits will change.
It is lonely at the top and the bigger your company gets, the lonelier it gets. Having a sounding board on your team to discuss if you should go into a new product line or whether you should give a price cut to your largest customer is a huge relief.
What about a part-time CFO?
A CFO is just too expensive you say. Consider collaborating with a CFO on a contract or part-time basis. It will obviously be more cost-effective. Ultimately, you are creating more time to focus on your strengths in the business rather than being in the weeds of your financial reporting and bookkeeping.
Choose proactive team players
When your Accountant, Bookkeeper and CFO collaborate, you will have a fine-tuned financial machine.
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