Did you know there’s a simple, costly mistake many small businesses make that actually has quite an easy solution? Outsourcing your bookkeeping and accounting needs is a great option, but is only part of the solution. You may not know it yet but, if you’re a growing small business, then you desperately need a CFO to help manage your finances. You’re probably not convinced yet, but we’ll explain why you need one below.

What is a CFO?

Many small business owners share at least one thing in common – the skill and ability to fill a need and provide value. Whether you are a local farmer or a tech startup, you’ve got something to offer, and you’ve figured out a way to make it profitable for yourself. Starting a small business is a big leap many entrepreneurs are terrified to make. It’s easy to come up with a vision and plan, but execution can be messy and unpredictable, making it easier to ponder and squander potential rather than risking failure.

If you’re a small business owner, congratulations! You’re very brave, and with your new ownership come a lot of responsibilities. Here’s a harsh reality- not every business owner understands or excels at the business side of things. The everyday, work side of things is no problem, but it’s another story when it comes to finances and administrative tasks.

Unless you’re really skilled at what you do, finances are often tighter with small businesses. There are fewer employees, meaning less-abled bodies to generate income. It’s a tricky balance. The fewer employees you have, the more tasks you will have to complete yourself. The more employees you hire, the more money you’ll have to make to pay those employees. Just thinking about trying to balance that is a headache. Trying to understand it as a small business owner is another story altogether!

That’s where a Chief Financial Officer (CFO) can help. A chief financial officer can be best described as a high-ranking executive that oversees the finances of a company. They are also behind any financial plans, including any analysis that may be required. In simpler words, a CFO is the head of the finance and accounting departments, reporting directly to the CEO or owner.

Why You Need A CFO

Now you know what a CFO does. Think about your current financial situation within your small business. What does it look like? Do you do all of your bookkeeping and finances? Maybe you outsourced them to a professional (an excellent idea), or perhaps you even have a bookkeeper on staff. No matter what you have set up right now, it could immediately see improvement with the addition of a CFO.

You’re probably wondering how that is. A CFO’s entire purpose is to be completely in tune with the financials of your business, understanding the situation better than anyone else. They know where your cash is coming in from, where it’s going, and what your business is capable of. Without someone specifically dedicated to this, you’re left with scattered information, and no one person has a definitive idea of how the business is doing.

If you’re a smart business owner (and, of course, you are), you know how important it is to understand the health of your business. Finance can be difficult to understand and, quite honestly, stressful. This is why it is good to have someone other than yourself as an owner keeping an unbiased eye on finances. This person will be impartial and won’t be emotionally tied to the finances, allowing them to make the best decision for the company.

To put it bluntly, if you’re interested in growing your business, you need to hire a CFO. As you acquire more responsibility and work, you’ll lose focus managing your finances. No matter how hard you may try, with your mind actively on other things, it’s nearly impossible to have a good understanding of your business’s health. This is where a CFO can be extremely helpful.

How a CFO Benefits You

Having an intelligent individual with an all-encompassing, impartial view of your business’s financial health is quite a boon. You might agree now that having a CFO is a good idea, but now you may ask – how will I benefit from hiring a CFO? That’s an excellent question, a good CFO will:

  •  Allow you room to grow. If you’re focused on adding new products, services, or expanding to a new location, you’re going to be busy. Having a CFO will allow you to know if something is financially feasible without having to do the research yourself.
  • Increase your profits. While a CFO does often come with a salary, it is well worth the expense. Having a good CFO can prevent you from making foolish business transactions, while helping steer you towards financially rewarding ventures. A CFO is also likely to keep tabs on accounting changes and trends, like deductions for pass-through income, so you can save as much money as possible, and stay relevant and compliant.
  • Improve efficiency. A CFO will oversee the accounting and finance departments. Having someone whose entire job is to analyze and manage will improve the productivity of employees in those departments. CFOs will handle tasks that employees don’t understand or have the knowledge to properly answer, letting other employees focus on their primary tasks. Having a CFO also eliminates the need for you, as an owner, to hassle over numbers.

Finding CFO Services

Unless you’re content with stagnating and staying small, you really do need a CFO to grow your business. There just isn’t another way to have a broad, complete understanding of your company’s financial health without dedicating someone to it. You might have managed without one up to this point, but continuing to do so is causing yourself more hassle than necessary!

Even if you can’t directly hire a CFO yet, you can always seek out professional accounting services that can mimic the role a CFO would play. As a small business, growth potential, increasing profits, and improving efficiency are all crucial to staying afloat. Simply put, having a CFO will cause your business to grow! You’ve managed well thus far, but letting someone else take care of the finances will ease your burden and let you focus on other aspects of your business.