Here’s Why a Part-time CFO is Key to Your Small Business
Mrs. Sanders has a great boutique downtown and has been managing it for quite some time. Her creative ideas brought more customers, and business was good. But as the business expanded, she couldn’t handle managing the finances.
She constantly struggled to get finances in order, but she kept missing. Tired of this, she asked for services, and her friend suggested hiring a part-time CFO.
She contacted Tangent Consulting, where we put her finances in order, and she had a clear roadmap.
If you are one of the small business owners like Sarah, and the thought of numbers scares you, here’s why you need a part-time CFO.
What Does a Part-Time CFO Do?
Let’s start with the basics. A lot of people have a misconception that a CFO only crunches numbers. However, it’s more than that. A part-time CFO provides the right financial support without being a full-time manager.
Many businesses don’t need a full-time CFO due to budget constraints or want specific services. Either way, a part-time CFO is best for them.
Here’s a breakdown of what a part-time CFO does:
Financial Planning and Analysis
As a small business owner, you need to manage everything. This includes marketing, advertising, sales, hiring employees, inventory management, and so much more.
On top of that, if you start doing finances, then you won’t get time to manage everything.
You are a human, not an AI (yeah, kudos ChatGPT)
Knowing all this, a part-time CFO makes financial plans that align with your business goals. These financial plans include budgeting, forecasting, measuring results, and identifying areas of opportunity and improvement. This helps you get on track and start finding ways to grow your business.
For instance, say you are launching a new product next month. A part-time CFO will wear their nerdy glasses to analyze costs, project potential revenue, and determine the break-even point. Imagine if you’d be doing it all by yourself. You would go crazy!
Cash Flow Management
If you can’t keep track of cash going in and out, you aren’t alone. According to the US Chamber of Commerce, 82% of small businesses fail due to cash flow problems.
That’s why keeping an eye on your cash flow is so important. When you hire a part-time CFO, you have enough liquidity to grow and support your small business and meet tax obligations.
For example, there’s a construction company we helped, which was experiencing seasonal fluctuations. We helped them manage their cash reserves during the off-season and kept cash for the busy season.
Strategic Planning
As we said, it’s not all about numbers. A part-time CFO can help you set long-term goals and create a strategic plan. The strategic plan covers everything from expansion, merger, acquisition, and business sales. They can also help you secure the necessary funding. We’ll talk about this in a while.
If you need inspo into strategic planning, according to the Journal of Small Business Management, 73% of growing companies have a strategic plan in place.
Risk Management
If you are into stocks, you know how important risk management is. If you fail to manage your risks, you can lose the investment. Identifying and limiting financial risks is part of a part-time CFO’s job.
They ensure that your business is prepared for any financial challenges that may arise at any time. For instance, during high inflation, a part-time CFO can help adjust the small business’s financial strategy so that it remains stable.
Financial Reporting
If you don’t know the audience for your business, you are going to do social media advertising randomly. Similarly, if you don’t do financial reporting, you aren’t going to get a clear picture of your business.
When we talk about financial reporting, we mean income statements, cash flow statements, and balance sheets. Knowing the key information from these statements can help you better understand your business’s situation.
By the way, Tangent Consulting’s CFO services include monthly financial statements, so you won’t have to wonder about your business’s finances.
When Should You Hire a Part-Time CFO?
You now know what a part-time CFO does. The next question is, what’s the suitable time to hire one?
There isn’t a single answer, and it depends on several factors. Here are some cases where bringing in a part-time CFO makes perfect sense:
Growth
If your business is expanding quickly, congratulations! Second, you need someone to guide you through that growth. A part-time CFO can help you grow your business sustainably so that your financial infrastructure keeps pace with the overall expansion.
According to the Small Business Administration (SBA), 20% of startups fail in their first year and never reach the growth stage. So, a part-time CFO can ensure your business finances are managed properly when growing.
And if you say, “Oh Tangent, I can do it on my own.” Well, good luck, we know you are a finance genie.
Key Financial Decisions
Sometimes, in a business, you need to make important financial decisions. For example, if you want to expand your business to another city or a country or launch a new product. Here, your part-time CFO will provide expert opinion by looking at the financial reports and help you decide if it’s the right thing to do.
Financial Troubles
We talked about business growth, but the opposite can happen, too. So, a CFO service provider will help you identify the root cause of the problem and develop a plan. So you can get back on track.
Preparing for Investment
If you want the business to grow and not have enough cash flow, a part-time CFO will prepare your business for getting a loan. They make sure financial reports highlight your business’s strength so you can get the best deal.
Benefits of Hiring Part-Time CFO Services
Mrs. Sanders faced several challenges with her small business. However, she didn’t want to hire a full-time CFO because flexibility was one of the biggest advantages of hiring a part-time CFO.
Let’s see what other benefits a part-time CFO offers:
Cost-Effectiveness
In the US and Canada, a full-time CFO’s salary and benefits are often in the six-figure range. Due to fewer working hours, a part-time CFO does the same thing for a fraction of the cost.
Flexibility
You don’t want to hire a full-time CFO as you need them only for a few hours. In this case, hiring a part-time CFO gives you expertise without a long-term commitment.
For instance, if you only need help during tax season, Tangent Consulting’s part-time CFO services can provide tax preparation services.
Expertise
Part-time CFOs usually work within different sectors for multiple companies, and their experience can help you. Their expertise can provide insights and innovative financial solutions. This often leads to better decision-making and ultimately helps grow your business.
Common Misconceptions About Part-Time CFOs
You may become skeptical of hiring a part-time CFO as a small business owner. We understand that, and we’ll debunk a few common misconceptions here.
- Some think part-time CFOs aren’t dedicated because of their work hours. However, lesser hours don’t mean less productivity.
- Another misconception is that a part-time CFO won’t have the time to truly understand your business. However, part-time CFOs work in several industries and for multiple companies.
- Some small business owners think hiring a part-time CFO is a short-term solution. However, their expertise has long-term benefits, such as sustained growth and financial stability.
Final Thoughts
A part-time CFO can be your Aladdin’s lamp if your small business is growing or experiencing financial stress. They ensure your business is up and running and does not have confusing numbers.
If you are looking for part-time CFO services, Tangent Consulting offers expertise and strategic planning without the full-time commitment.
To find out, check out our CFO services page and learn how we can help you.
FAQs
Is a part-time CFO worth it?
You’ll need to outsource some of the services at some point, and managing finances is one of the most tedious tasks. Part-time CFO brings a wealth of experience at a fraction of the cost.
What’s the difference between a part-time CFO and a full-time CFO?
The major difference between part-time and full-time CFO is the number of hours they work and the leadership role. A full-time CFO leads your whole finance department.
