Is My Business Ready to Hire a CFO?

A CFO brings high-level expertise and strategy to an organization. A CFO’s primary role is to elevate financial strategy, streamline operations, trim fat, and maximize sustainable growth. But how do you know if your company is ready for a CFO? What are your options for hiring a CFO? There are many things small business owners should know before hiring one.  If your company is experiencing any of the following symptoms then it is time to consider hiring a part-time CFO or full-time CFO services

1. You don’t have easy answers to your questions

How easy is it for you to make financial or strategic decisions? Most major business decisions require detailed financial knowledge. If your current accountant or financial team is unable to give you the detailed information you need to make important or strategic decisions, it may be time to hire a part-time CFO. A CFO’s primary goal is to make sure your company can engage in a higher level of strategy for sustainable growth. Strategy first and foremost requires access to the answers you need to make educated decisions.

2. Looking for Outside Investors

The critical external point is when respect must be gained outside the company. That could be from customers, suppliers, banks, shareholders or government regulators. An outsourced CFO can handle all relations with outside investors and ensure that your company is properly prepared.

3.  Your Company Is Losing Money But You Don’t Know How

If it feels like your company spending is out of control and you’re not sure which costs to cut or how to make those cuts, then it may be time to hire a part-time CFO. While the age-old adage of “you have to spend money to make money” is somewhat true, the key to success is strategic spending. Strategic spending often takes financial analysis, projections, and checks and balances that most executives simply don’t have time for.

Having your cash flow analyzed by a CFO can often be one of the most beneficial moves your company can in immediate financial impact. Not only will a part-time CFO help to eliminate unnecessary spending, they will also have extensive knowledge in benchmarks and will have vendor relationships or knowledge that can optimize your existing spends and help keep you competitive in your market.

4. Need To Raise Capital

If you’re raising capital, you may want to have the help of a part-time CFO. This is especially true if you:

  • Aren’t sure how much you need to raise
  • Don’t have a strategy for the right debt-to-equity ratio
  • Are raising a series C or later

CFO services will have extensive experience raising money for companies in similar lifecycle stages and industries. In addition, they will already have the relationships and credibility that can help you achieve your goals. Part-time CFOs not only help determine the right type of financing to acquire (and how much), but they also help answer tough questions during due-diligence, analyze and negotiate contract terms, and can attend meetings to help provide financial expertise and insight.

5. Your Company is Experiencing Rapid Growth

Growth requires an expansion of automated systems to handle the growth, and additional capital and/or financing to finance the growth. A CFO is best suited to handle rapidly increasing growth due to the complexity involved. He or she must be able to interpret the investment and technology, and the terms of acquiring capital.

6. You Don’t Have a Long-term Financial Strategy

When your company first started or raised funds for the first time, you probably put together a financial forecast. However, it’s also highly likely that this forecast has rarely (if ever) been looked at since, let alone revised and kept up-to-date. A part-time CFO is pro at making educated financial projections based on your historical data, industry trends, and data from companies in a similar lifecycle stage. If you don’t have a long-term financial strategy—or not one you feel you can have confidence in—then a part-time CFO can help you create a realistic financial blueprint to help you achieve your goals.

7. Preparing for a Merger & Acquisition

One final indicator is when a business is preparing for a merger or acquisition. In this situation, the CFO must be able to choose the correct team to evaluate a target acquisition. In many cases, that will result in outsourcing to a firm to perform the financial and regulatory due diligence. The CFO is the best person to interpret the report issued by the due diligence team so the terms can be tailored to the findings. A very important skill required of CFOs is the ability to feed a potential investor or lender. Preparing the information and anticipating their questions will shorten the process and eliminate further digging.

Final Thoughts

A CFO is the one who understands the economics of the business and will help the business owner better understand the finances concerning the health of their business. This insight alone makes having access to a CFO beneficial for any business owner, regardless of size.

Limitless Investment and Capital Outsourced CFO Services in Denver

Limitless Investment and Capital provides fast-growing companies with part-time CFOs at a fraction of the cost of hiring a full-time internal CFO. To find out more about our full-time and part-time CFO services, contact us today.

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