Small Business Brief

Financial Services

What Is a CFO and Why Does Your Business Need One?

You’ve heard the term CFO thrown around, but you aren’t exactly sure what it means. What is a CFO? Why does your business need one? When should you hire one? Keep reading to learn everything you need to know about a CFO.

For a fast growing business, managing finances can be a challenge. By hiring a Chief Financial Officer (CFO), though, the task can become a lot easier.

You may be in a position where your business is growing. But you might not be sure whether hiring a CFO is the right thing to do for your business. You may even be asking yourself right now, “what is a CFO?”

Luckily, it is not too hard to understand what a CFO is and whether your business will benefit from hiring a CFO.

In fact, if you keep reading, you’ll learn exactly what a CFO is. You’ll also learn what a CFO can do for a business and how you can go about finding the right one for your company.

Let’s begin!

What Is a CFO and What Do They Do?

The job of the CFO is to take care of and manage the financial aspects of a business. They will have a head for numbers and will help various departments make better decisions.

More specifically, they will be able to help the CEO make better decisions. That is because they’ll be able to forecast the growth of the business, using the current numbers provided to them.

The CEO can then decide how business funds should be allocated and invested. This makes it easier to manage the various aspects of the business.

For instance, using numbers provided by the CFO, the CEO will be able to decide whether a department can hire more people. They’ll also be able to decide whether there needs to be a stronger sales drive or if there is money that can be spent on research and development.

If the CEO wants to grow the business, but income is not high, there is the option of raising capital. The CFO will be able to help the CEO work out how raising capital is going to impact various aspects of the business. They’ll also be able to highlight how raising money will impact the value of the shares that have been handed out already.

Should You Hire a CFO?

This is a question a lot of businesses find themselves struggling with. Especially when you consider that a high-quality CFO is going to be expensive for the business.

If you happen to find yourself answering ‘yes’ to the scenarios mentioned above, then your business will likely benefit as a result of hiring a CFO.

If you find yourself struggling to crunch the numbers in your business then a CFO can be especially helpful. This is certainly the case when you are dealing with a business that is heavily impacted by variations in cash flow. If you have already been caught off guard, because you didn’t have enough money for payroll (when you thought you would) then a CFO can be a good hire.

Even if you do consider yourself to be someone who is competent with numbers a CFO can still be a good hire. You can’t run your business and move it forward if you are constantly analyzing spreadsheets.

A good CFO will be able to provide you with insights without the need for you to trawl through a large list of numbers. You can then take these insights and make data-driven decisions in regards to your business. This, therefore, helps you grow your business, without having to worry about the numbers side of things.

If your business is seasonal, or just experiencing a one-off sales peak, you may not need to hire a full time, in-house CFO. Rather you might be able to get away with using some CFO consulting services. This can help you keep your costs manageable, whilst still giving you the chance to experience the benefits of working with a CFO.

Hiring a Specialized CFO

Like any other position in your company, finding a good CFO is not going to be easy. You need to be patient if you want to find someone who will be the right fit for your organization.

Ideally, you will want to work with someone who has experience in your industry. This will ensure they are aware of how to crunch the numbers for a business like yours. Such an individual will also be aware of the pitfalls a business like yours can fall into.

If you’re going to find someone who is specialized like this, you will probably need to pay them more than the average CFO. You might not want to pay this extra cost, but you need to keep in mind what you stand to gain. Spending money on the right CFO can be worth it if this individual can provide insights that help you grow your business.

How to Find a CFO

If you are in a niche industry, you might want to reach out to a recruitment firm.

They will be able to headhunt someone who is going to be a good fit for your role. If you do not have a lot of time on your hands then this approach can be worth it. It will allow you to focus on running your business, whilst other people are working hard to find the right CFO for your needs.

If you happen to have some spare time, you may want to consider doing things on your own. You can do this with the help of LinkedIn. All you need to do is find CFO’s that are working in similar industries to your own.

You can then send them an ‘InMail’ asking them if they’d be interested in working with you.

You will want to do this in a ‘non-pushy’ way. Just let them know there is an opportunity for an offer and then detail everything there is to gain. You might even want to invite them to have a short conversation with you, which will allow them to learn more.

Do You Have a Head for Numbers?

A CFO can help you crunch the numbers in your business. They can then help you make decisions based on what they have learned. If you do not have a head for numbers then a CFO can be helpful. Especially if you have a growing business.

In this post, we’ve reviewed some of the things you need to think about once you have an answer to the question–“what is a CFO’. If you need a CFO, you need to think about finding a CFO who understands your industry. It also helps to use the services of a recruitment firm if you are struggling to find one on your own.

If you only need a short-term CFO, you can even use a consulting service. In doing so, you will be able to keep your costs from spiraling out of control.

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