Why you should hire a CFO for your small business

Most people do not realize how important it is to have an experienced CFO to steer the business during difficult times. Hence, now there is a virtual CFO service that costs a fraction of the usual price. Let’s learn about the functions of a virtual chief financial officer.

Is your small business currently able to do these things?

  • Access the company’s financial performance
  • Benchmark performance to industry standards
  • Make revenue-producing decisions
  • Operate according to a budget
  • Analyse variances between your budget and actual performance
  • Prepare financial forecasts for shareholders and lenders
  • Make strategic decisions based on accurate financial data

A CFO may be needed if not.

You may argue, “But we’re not big enough to justify the expense of a CFO.”. I already have a bookkeeper.

The importance of bookkeeping cannot be overemphasized. Yet CFO services are far more than just tracking dollars and cents. CFOs make a significant difference in your profitability and cash flow. The CEO is a proactive member of the team who helps crunch numbers in order to facilitate strategic decision-making. Small businesses may find success in accessing CFO services on a scaled basis.

A CFO’s Role in a Small Business

People tend to associate CFOs with large companies. Typically, large companies hire a full-time CFO to handle the above tasks. However, small businesses can also benefit from these services by hiring a part-time CFO. By having a deeper understanding of their company’s data and numbers, they can make more strategic decisions and take advantage of opportunities as they arise.

Having a part-time CFO can also help you track and maintain your company’s financial gears. You will have more information about your operations than ever before with cloud-based accounting and tools for sorting big data.

Here are the reasons why a small business should hire a CFO.

1. Streamline Your Cash Flow

The Australian Bureau of Statistics reports that more than 60 percent of small business startups fail within the first three years. What is the main reason? Inability to manage cash flow.

Small businesses rely on cash to survive. They must plan and monitor their cash flow religiously. When you reach a cash crunch, it’s too late to adjust your timing. Your business needs an accurate cash flow forecast for working capital in the short term as well as the longer term.

Your part-time CFO can iron out the wrinkles in your cash flow and put systems in place to safeguard it from storms that may arise.

2. Prepare budgets and financial forecasts

Business owners are usually too busy running their businesses to prepare budgets and financial forecasts. In the long run, this lack of attention to the future can cause you to miss opportunities and fail to reach your long-term goals.

What you don’t measure can’t be improved. A small business without budgets and key performance indicators is essentially flying blind.

Your CFO will dive deeply into your business financials while you handle your operations, identifying pain points and enabling course corrections where needed. If you use accurate budgets and financial forecasts, you’ll be able to navigate a straight path to your goals.

3. Increase Your Profits

Most small businesses already have a Profit and Loss report and use it to compare month-to-month results. However, is the report accurate? Do you have the time to reconcile it? Will your profits disappear next month?

With the help of a CFO, you can benchmark profits and financials using industry averages and standards. When a CFO identifies areas for improvement, businesses often see a return quickly by reducing wasteful expenditures.

4. Minimize your risks

All businesses face risks such as bankruptcy, market downturns, decreased profits, and unpredictability (as we have seen with COVID-19). These factors can have serious consequences for your company’s financial health.

The CFO will become familiar with your business and help you put strategies in place to manage risks in a holistic, proactive manner. With insurance and succession planning, you can protect your business from the unexpected.

5. Improve Your Company’s Value

Eventually, you’ll leave your business, and you may sell it or hand it over to a family member or colleague. Have you ever wondered how much your business is worth?

The value of a small business can’t be put into dollars, but knowing its worth is essential. Without this information, planning for retirement becomes difficult.

A CFO can help you increase the value of your business so that, when you’re ready, you can sell it for more than it’s currently worth.

6. Revise your structure and organization

As many small business owners do, you started small and grew over time. At some point, small businesses need a bit more structure, and employees need more guidance.

CFOs can help you understand the pros and cons of different organizational designs. With the right structure, employees will be motivated, knowledgeable, and equipped to succeed.

Consult one of our business experts about CFO services that are perfectly scaled to your current needs if you are not ready for an in-house, full-time CFO. You don’t need to be a large corporation to enjoy the immeasurable benefits of a chief financial officer. Get in touch with us at Afitty today to discuss your business’s future.

Why choose Afitty?

Afitty provides the best CFO services in Singapore and China. Let our skilled and efficient professionals assist you in better financial management and business strategies. We are different from others because of our experience and dedication. We value your trust in us and will work with you to overcome obstacles so your company can achieve its goals and fulfill your needs. Once you get stuck with decision making, our CFO experts will assist you.

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