Is Your Small Business Ready For A CFO?

Posted by: Brookside Admin

When you initally start a new business, you look for opportunities to save money everywhere. That means you likely sacrafice having a full staff in order to keep operating costs as low as possible. Eventually, however, your business's growth dictates a growth for your staff as well. One of the most common positions lacking from small businesses is a Chief Financial Officer. For a company that's just starting out, a CFO likely isn't necessary. But, there comes a point when a growing business needs to add one, as noted in a recent Forbes article. While each business is unique, here are a few tell-tale signs that it's time to either hire an on-staff CFO, or hire an outside firm like Brown Kinion and Company to handle that workload for you. 

  • Lack of information

As the owner of a small business, you're forced to wear many hats. In order to keep up with the laundry list of tasks and duties you're responsible for, you need up to date information about the current state of your business and your finances. As your business grows, it becomes more difficult to keep this information up to date at all times. That's where a CFO would step-in. A CFO would continuously interpret the results of previous actions, find cost cutting and capital acquisition opportunities and plan for changes that will affect your industry. With a CFO at your disposal, you'll know that your financial stability is being kept up to date and being planned for. 

  • Transactions, not revenue

You may set revenue benchmarks for your business that help you decide when to expand. In reality, however, revenue is a poor indicator of your need to add a CFO or other staff members. Instead, take a look at the way you do business. The more transactions you conduct in a day, month or quarter, the more complex your financial situation will become. For example, a business that sells a small number of products for a large sum will have an easier time without a CFO than a business with the same revenue that relies on hundreds of sales of cheaper products. Additionally, how complex each transaction is can make the need for a CFO with in-depth knowledge and expertise come quicker. 

  • Positioning for an acquisition

If a merger or acquisition is imminent, or is the best option for the future of your business, the need for a CFO becomes critical. If you're acquiring another company, your CFO will take charge of evaluating the target and deciphering the financial report issued by the due diligence team. The CFO's input will help you tailor the details of the acquisition to best position your company. Without a qualified CFO in place in this situation, the process will take much longer and you may never get critical information that will shape the entire transaction.

Having a professional to manage your business's finances becomes critical at a certain stage to reduce risk and maximize opportunity. At Brown Kinion and Company, our experts possess the knowledge and skill necessary to effectively manage your company's finances, which allows you to outsource instead of adding staff members. Contact us to learn more about our Part-Time CFO services.