Why Your Mid-Size Company Might Be Ready for a Fractional CFO: Signs and Solutions

Growing a business from a small startup to a legitimate mid-size company is a big deal. But new business growth means new territory to explore – and that territory is often filled with unknowns. At this stage, many mid-size business owners share common concerns about the future.

They become anxious as they confront challenges at a new level of complexity or scale. They become frustrated as they realize that many of the systems, processes, and resources used for growth may not serve them well anymore. They worry about how to cover current expenses while also preparing for the future. They stress about having a lack of guidance and about needing an experienced leader who can navigate them through the unknown. 

If we’re being honest, the type of business growth needed to get to the “next level” can take an entrepreneur out of their comfort zone. If that sounds familiar, you should know that a solution exists. A good fractional CFO works by your side to drive your business toward maximum impact. Whether the next benchmark for your business is a transition, growth, or better control over your finances, a fractional CFO steers your ship toward success.

Key Takeaways:

1. Challenges of Growth: Mid-size businesses often struggle with outdated systems and the need for experienced leadership as they expand.
2. Role of a Fractional CFO: A fractional CFO provides part-time strategic financial guidance without the full-time cost, helping with financial strategy, risk management, and growth planning.
3. Benefits: The benefits of hiring a fractional CFO include improved decision-making, better financial management, and strategic alignment with business goals.
4. Identifying Need: Businesses should consider a fractional CFO if they face issues with profitability, financial reporting, or strategic planning.
5. Cost-Benefit: While there’s an upfront cost, the strategic advantages and long-term financial health improvements justify the investment in a fractional CFO.

Wondering whether you really need that type of guidance? Ask yourself these questions:

1. Is your revenue growing but your profits are flat?
2. Do you get accurate and timely KPIs and financial reports?
3. Do you know the true profitability of your products, services, and clients?
4. Can you rely on your current financial team to get to the next level?
5. Are your personal and business goals defined for the next 3-5 years? Beyond?
6. Do you worry that the value of your business won’t fund retirement?
7. Have you thought of a goal for the succession of your business?
8. Are you having fun running your business at this stage in life?

Now that we’ve got you thinking, let’s see if your business is ready for a fractional CFO. To help answer that question, let’s first look at what a CFO actually does.

Understanding the Role of a CFO

People from a certain era may still believe that CFOs are glorified gatekeepers of financial information. Those days are long gone. Today, CFOs have a nuanced role in business as innovators, strategists, and most importantly, as leaders. They oversee the overall financial management, strategy, and operations of a company. They are crucial not just for proper financial reporting and cash flow but for executing strategic financial decisions backed by research and experience.

For many mid-sized businesses, however, hiring a full-time CFO isn’t in the cards. Sometimes, budgets don’t allow for a new six-figure salary. Other times, the business needs help with specific projects or challenges. That’s when working with a company like CFO ReStart begins to make a lot of sense.

Full-Time vs. Fractional CFOs

Unlike a full-time CFO, who manages general financial strategy, a fractional CFO may provide guidance on a part-time or per-project basis. They can be particularly valuable for businesses undergoing significant changes or experiencing challenges. They often act as “truth tellers” within a business, giving an outside perspective and sometimes delivering difficult messages that internal team members might hesitate to share.

It’s nearly impossible to maximize your company’s value without a CFO to line up your business strategy with your financials and develop a forward-looking roadmap for your mid-size business.

Some specific duties that fractional CFOs oversee can include:

• Growth Strategy Analysis
• Strategic Finance Management
• Audit Preparation
• Cash Flow Management
• Risk Management
• Financial Budgeting and Forecasting
• M&A Assistance

You’re Ready for a Fractional CFO When…

Here’s the million-dollar question you’re probably trying to answer: “Is my business really ready for a fractional CFO?” At CFO ReStart, we hear this question all the time. While it’s hard to provide a definitive answer without knowing more about your business and your financial goals, you might be ready for a fractional CFO when:

You Need to Overcome Growing Pains

Growing a business is no easy feat. If you’re a business owner who feels like you’ve reached a point where the scale or complexity is becoming overwhelming, a fractional CFO can help. Just like climbing a mountain, business growth is a difficult and challenging process with many unknowns. By working with a company like CFO ReStart, you’ll have a guide to help you navigate the journey and chart a path to success. It still won’t be easy, but with support and guidance, you’ll be better equipped to conquer the challenges that come with growth.

It’s Time to Take Control of Your Finances

Do you find yourself constantly worrying about cash flow, paying bills, and making payroll? Are you unsure whether now is the time to invest in enhancing your business? If paying for the present and planning for the future is a pain point within your organization, consider a fractional CFO. Having a financial leader by your side to build models and develop strategies can help you chart a path toward growth, health, and value.

You’ve Got to Make Better Decisions

No matter what kind of business you own, there comes a time when you realize that what you don’t know is a threat to your survival. The savviest leaders and entrepreneurs use these moments to seek help. They find the best people with the right expertise to fill important gaps. That’s what CFO ReStart does best. We embed ourselves alongside you and your team. That way, we become an extension of your leadership team and help filter out unwanted noise, so you have the bandwidth to digest metrics and make decisions that matter.

You Want to Rediscover the Fun of Entrepreneurship

If you’re like many successful entrepreneurs, you hit a wall at some point on your journey. Your business used to inspire excitement and energy. Now, it feels like drudgery – something that you have to do instead of something you want to do. With the right type of strategic financial guidance, you can reclaim your passion and shift your vision back to “big picture” tasks.

Is Now the Time for Strategic Finance Management? 3 Fractional CFO FAQs

Mid-size business owners choose to work with CFO ReStart because we treat them like they’re our one-and-only. Throughout the many successful relationships in which we’ve been engaged, our experts have run across common questions that we believe may help you understand the importance of great financial leadership. We’ve compiled some of those questions below.

Q: Is there a revenue mark that determines when I should consider a CFO?

A:  If your business is up and running with more spinning plates than you can account for, fractional CFOs can be invaluable. That’s especially true if you need to do forward-planning or you’re unsure where to take your business next. At this point, you’ve got data. You know who you’re serving and what your customers are buying. Now, you need someone to turn that data into actionable insight. Think of this as an investment, not an expense. After all, a fractional CFO should pay for themselves several times over.

Q: What will it cost if I don’t hire a CFO?

A: Foregoing a CFO’s guidance may result in missed opportunities to price your products and services efficiently, manage your invested cash in inventory, and differentiate good customers from bad ones. There are many hidden costs in running a business, such as the cost of maintaining a demanding client. Great fractional CFOs – like those at CFO ReStart – will peel back the proverbial onion of your business and expose where you’re losing money. Without having someone to actually run the numbers, you might not know you’re losing money until it’s too late.

Q: What additional benefits do I get by bringing in a fractional CFO?

A: Top-tier CFOs zoom in on your financials, examine expenses like staffing, and compare them to your revenue. By examining items like product sales cycles and manufacturing costs, a fractional CFO will help calculate accurate ROI for your company. A CFO also manages your financial future while sustaining the past. Invoices have to be collected. Bills must go out. Cash has to be managed. New ideas must be filtered. Your fractional CFO will analyze new structures and how to model them. That way, if you take on new business categories, you’ll have accurate models designed to create profit.

Your Financial Freedom Begins with a Simple Conversation

The best data and insights are useless without the right guidance behind the scenes. However, not every company can hire full-time experts to maximize growth. That’s what makes CFO ReStart a strong partner when scaling the mountain to future success. Our fractional CFOs function just like traditional financial leaders but at a fraction of the cost.

As experienced guides on your climb, we never dispense advice and leave before implementing a strategy. Instead, we work alongside your team to develop strategic financial plans tailored to your business goals. By giving you the tools to make informed financial decisions, we lead you to the top of the mountain while your competitors gain their footing.

Interested in learning more? Let’s have a conversation about your challenges and vision for the future. That way, we can see if we’re a good fit for your business. Contact our office today to get started.