How do you know when to go from just having a bookkeeper, to hiring a fractional CFO?
In this post, I list five signs that may indicate it’s time to start looking for someone to fill this role for your business.
1. It’s been a while since you thought strategically about your business finances.
You’re keeping things updated and you’re paying your bills and your people, but you’re not taking enough time each month to think strategically about your business finances.
This is where a fractional CFO can assist you. Because while your bookkeeper can help you stay reconciled and up-to-date on your finances, your fractional CFO can provide higher-level insights into your financial information and help you put together a financial plan. They are going to be more active than your bookkeeper at modeling, forecasting, managing your cash flow, and implementing any financial initiatives you have for your business.
Unlike your bookkeeper, your fractional CFO is going to help you decide if you want to make investments for the business. And if you decide to invest in other areas of your business, he or she will guide you through that process and show you where you would need to grow to absorb the expenses.
Also, your fractional CFO can help you put together business plans and pitch decks if you want to get:
- A line of credit from a bank
- A bank loan
- Money from outside investors
It’s a lot of work. And if you’ve been putting it off until you can take care of it all on your own, now might be the time to start looking for a fractional CFO.
2. You’re not sure what all your financial data means for you.
Your bookkeeper can help explain the basics of your financial data, but he or she may not be able to tell you how that data fits into your growth plan.
However, your fractional CFO can help you know what that data means for your company’s current financial state and how it plays a role in accomplishing your financial goals.
3. You’re not sure how to build out a solid forecast.
Let’s say you want to grow from $1m to $5m.
To accomplish this, you need to take your current financial information and build out a forecast that shows you how to get from here to there. Your fractional CFO can help you do this.
You need to be able to answer questions like:
- How much money do I need to spend on what resources in order to grow?
- If I need to hire someone, when am I going to do that? What supplies and materials do I need? What are acceptable profit margins?
- What’s an acceptable net income?
When you’re forecasting, it’s all hypothetical, but it’s necessary to adequately prepare for growth. And it’s something your fractional CFO can do for you.
4. You’re under audit (or you’re about to be audited).
A lot of times a traditional bookkeeper isn’t going to be an expert on all the stuff that auditors expect to see. Whether the IRS is auditing you, you’re planning to merge with another business, or you’re planning to sell your business, your fractional CFO can help you get everything in order, so the process is as quick and painless as possible.
5. You are thinking strategically about your finances (but that’s taking time away from other tasks).
You use your bookkeeper to keep things updated and reconciled, but you’re handling all the high-level strategic financial tasks (like forecasting). The problem is, this takes a significant amount of time. And if you’re growing, time isn’t a resource you likely have a lot of. So, what can end up happening is that you either:
- Have a lot of non-financial tasks that aren’t being done because you’re focusing on being your own CFO
- Or the high-level strategic financial work isn’t being done because you’re focused on other areas of your business.
Your fractional CFO can handle the high-level strategic financial tasks for you, so you can focus on the stuff you do best.
Bottom Line
By paying attention to these signs, you’ll have a better idea of when you should bring on a fractional CFO.
If you read one of these signs and thought, “that’s me,” let’s talk.
I’d love to share how I can help you through my fractional CFO services.
And if you need a bookkeeper to help as well, my team and I can assist you.
Click the Schedule a Consultation button to book a time to talk.