Stop the Guessing & Consider a Fractional CFO for Your Business

Another quarter has gone by and it felt like a good one.

You think. 

Rolling the dice? Instead, consider getting some real insights to make the best business decisions. Photo by lil artsy

Or maybe you’re not sure. 

You feel like you made a lot of great decisions. You tightened up your proposal process and feel like you won good work.

You made significant changes in your inventory control processes and that cleaned up the shop.

You also leveraged your increased volumes to negotiate improved pricing with key suppliers. You lost a head or two to attrition and hired a great operations manager.

Yup, you made many great decisions. And sales were up 16% year-over-year.

So it must have been a good quarter.

But How Do You Know For Sure? 

Because in spite of all that good progress, your cash balance is more or less where it was 90 days ago. You’re spinning your wheels from that perspective. But you’ve been doing this long enough to know that cash balance (while important) is not always a great indicator of operational performance. There are just too many variables that play into your cash balance.

You think things are looking good…but you don’t want to go on a gut feeling alone. 

What do you need? You need insights. 

You need financial reporting. And you need it to be timely. You need an income statement, balance sheet, cash flow statement, accounts receivable aging, accounts payable aging, sales by customer or segment, and whatever other reports may be important to your industry (e.g. inventory report, labor report, etc.) and you need to know how you performed v. some standard.

Maybe you’ve needed this information for years but never made progress with it. Maybe your financial team (or person) is bogged down in the daily and weekly tasks of payroll, invoicing, entering bills, categorizing transactions, paying bills, etc. Maybe they don’t have the time or the training to give you the reporting you need. Or maybe that information feels too sensitive to share with them. 

If this sounds like you, it may be time to consider hiring a Fractional CFO. 

Recommended Read: KPIs: What You Measure is What You Get

Four Reasons to Consider Hiring a Fractional CFO

1. You Don’t Know How to Manage A CFO

We can be honest, you’re not a finance person. You’re an entrepreneur. And you might not even think of yourself as that. You might think of yourself as a mason or an engineer. You might know how to manage labor on the job, or how to coach a junior engineer in how to use SolidWorks. But you probably don’t even know the right questions to ask of your finance team–why would you? 

With a Fractional CFO, you can express what you think you might need and they can start iterating until both sides get to where they want to go. A Fractional CFO is a contracted resource, so the commitment level is lower than a hire and there is a sense of them needing to continue to provide value for you month after month. 

2. Your Team Could Benefit from Coaching and Mentorship

Just as you don’t necessarily know what you need, you may not know how to direct your current accounting and finance people. You know what you’re getting isn’t what you want to see, but you don’t know how to get something better.

You have a hunch that the team could perform at a higher level, but you’re not sure how to get them there.

Once again, a Fractional CFO becomes the coach your team is longing for. Rather than going to you with operational questions about debits and credits, instead, they will now go to the Fractional CFO for answers (and get them!). Through this process of training and strategic direction your team’s performance will improve–sometimes dramatically–as they have more clear direction. This clears your plate to think about the big picture financial decisions that deserve your focus and attention.

3. It’s A Low-Risk Way to Tiptoe into Leveling Up Your Finance Department

Is it time to level up your business adventure? Photo by Alex Kinkate.

One of the best things about a fractional resource is it provides the opportunity to explore something that you might not be ready to jump into otherwise.

Hiring a full-time CFO might seem an impossibility for you and your business, and may not in fact be a wise move. A full-time hire involves not just the money, but also the stress and pressure of recruiting and retaining someone with the right qualifications.

With a Fractional CFO, you can monitor the results of their efforts. Are you getting better information to work with as an owner? Is your team working more effectively?

If it’s working, you will certainly want to maintain and perhaps even consider a larger investment in such a resource to accelerate the improvements you see in the business, but still at a fraction of the cost and commitment of a full-time employee.

Recommended Read: We've Got It Handled: The Value of an Outside Perspective

4. It Gives You The Access and Leverage of Financial Best Practices

Another great reason to consider a Fractional CFO is to bring all the best ideas to you. Fractional CFOs work with numerous companies over time. They know what works and what doesn’t work. They know the best way to get from Point A to Point B. They know which metrics to focus on so you don’t get overwhelmed or miss key patterns. They are in touch with trends, resources, and tools that are outside the scope of most entrepreneurs. For example, most will be familiar with a whole range of financial software. They will also have relationships with many key professionals that may be needed. But most importantly, they bring objective and deeply skilled insight to this crucial, often mysterious aspect of your business. 

Don’t underestimate the power of having this team member in your corner. 

Doescher Group Can be Your Fractional CFO

At Doescher Group, we work with companies just like yours who are either looking to evolve their business or ready to begin the exit process. In both cases, the strategic finance role is critical, but the seat often remains empty before our involvement. If this sounds like you, we’re here to help you and your team move through this unfamiliar financial terrain with confidence and ease. Don’t hesitate to reach out. We love meeting business owners like you!