Depending on the type of business you have, a CFO can be a definite asset to your business. However, as helpful as a CFO might be strategically, it may not be financially realistic to hire one full time.
What about a part-time CFO consultant?
Before posting on Craigslist or any other job site, you should ask why you need a CFO today. It's important to consider how much added value a CFO brings to the business. More times than not, small business owners hire a CFO prematurely and it could be costly in the long run. The cost to the business owner may include paying competitive wages, or even issuing equity during the growth stage of a business when financial resources are limited.
To help assess if your business needs to hire a CFO, the following is a list of duties and responsibilities a CFO should provide small business owners:
1. Act as a financial gatekeeper of all business transactions:
b. Communicates the progress of a company’s operations from the figures represented on the company’s financial statements--
c. Creates accurate financial projections for the company based on qualitative data and does not forecast exponential growth if it is not feasible
d. Ensures the company’s cash flow is solid and prevents the business from financial hardship
2. Develops the company’s growth and operational strategies alongside the business owner(s):
a. Provides a balance between conceptual and practical; a CFO consultant relies on the actual resources available to create their strategies while most business owners tend to be more ambitious by raising expectations.
b. Determines if a business plan is too aggressive or not aggressive enough.
Once again, depending the type of business and even industry, a CFO may or may not be needed. As well, depending on the type of business owner you are, a CFO might be the greatest employee you ever hire or they may become a nuisance; however, it is difficult to determine initially whether your CFO is effective. Therefore, the following is a list of criteria to qualify your whether your decision to hire a CFO consultant is a need or a want:
- Is your business growing faster than you can handle?
- Do you require financial expertise that exceeds the capacity of your accounting department?
- Do you have ambitions of taking your company public?
- Do you require additional capital for your business growth?
- Does your business need to improve its business plan and overall strategies?
A great CFO would be able to accommodate every concern listed above; however, great business advice is seldom cheap. If your company cannot gainfully employ a full time CFO, the challenges of a part-time CFO would be the following:
- Being part-time, the CFO consultant may not get a true understanding of a company’s business dynamic.
- Most CFO consultants have ambitions of gaining full time employment and/or becoming an equity partner in the business. This may not be the intention of the business owners.
- Small businesses, depending on their current situation, may not be able to afford the services of a part-time consultant. Paying hourly consulting rates could easily exceed a full time management salary; therefore, there may be added pressure for the CFO to deliver within unrealistic deadlines.
In conclusion deciding whether a part-time CFO is effective could only be assessed on a case-by-case basis. If growth is imminent for your business and you are willing to have the CFO consultant grow with your business then hiring part-time in the short term can be effective. However, if there is uncertainty whether a CFO part-time is effective, there are plenty of professionals who could easily help in the decision process.
Speak with a designated accountant that specializes in corporate tax and/or management accounting to get a better understanding how a CFO can improve your business.