Profit ensures that your business stays afloat.
It becomes all the more critical for mission-driven businesses — after all, you've got a mission and impact you want to make on the world. How can you serve your purpose without profit?
But increasing profit and staying financially healthy is easier said than done. If you want to make a profit, there's always more to do than time in a healthy workday. You have to juggle budgets and crunch numbers while also meeting clients and trying to find new ways to grow your company. With so many things to do, it's a strategic decision to invest or not to invest in an experienced Chief Financial Officer (CFO) by your side.
CFOs are financial professionals who can partially lift the burden of financial strategy off your shoulders. Engaging with a good CFO might be the solution your company needs to take it to the next level. But what if you don't have the budget to hire a full-time CFO — or maybe you don't need one?
If that’s the case, investing in a fractional CFO might be the most viable option for you — and it may be the best decision you ever make for your business.
Let’s explore why a fractional CFO is a smart investment and how to find the right one.
Why you need a fractional CFO
A fractional CFO brings extensive financial skills and knowledge to a company, typically on a part-time basis. Hiring one at the right time can add long-lasting value to your business.
Here are some reasons why you should hire a fractional virtual CFO service:
Improving Your Financial Strategy
Sometimes, internal financial and accounting staff might be so busy in the weeds and focusing on historical data that they do not have the time to perform strategic financial planning. Or if you only have a bookkeeper figure out the historical data, the strategy piece could be neglected.
Getting a fractional CFO allows you to obtain financial advice and strategies that would weigh in on crucial business decisions. When your fractional CFO is forward-looking and brings valuable finance perspectives to the table, it will add significant value to your business.
Raising Funds
Every company needs financial resources to fuel its growth or maintain operations. For mission-driven businesses, cash is critical if you want to keep your organization and mission alive. So is profitability. Depending on your focus, what type of fund you want to raise is a strategic decision too. A fractional CFO can offer extensive financial insight to increase the value being negotiated with potential investors or lenders. Also, they can handle the due diligence process as well.
Creating Smoother Transitions
High growth or a downturn are both major changes that a business could experience. A fractional CFO that can see around the corner is a valuable asset.
With the assistance from a fractional CFO, there's less or no stress when handling significant organic growth, acquisitions, and other significant shifts that could restructure your company’s finances, allowing for smoother transitions.
Improving Financial Stability
A fractional CFO can keep the wheels of the business turning and on track. They can assess a company’s needs, identify financial issues and risks, and determine steps to ensure that your business is financially sound.
Monitoring and Developing Staff
Many companies entrust their internal staff to fractional CFOs for mentoring and development. It helps pass on the skills and knowledge that a fractional CFO has to your employees, unlocking their potential and honing their capabilities. And that then creates a more holistically developed, efficient, and skilled workforce.
Providing Support to the Board
A fractional CFO could serve as an intermediary providing specialized and guided expertise in board meetings. They can present a fresh outlook and communicate prominent points to the company's hierarchy. Since they do not have personal ties to the company, a fractional CFO will be free of conflicts of interest.
Building Stakeholder Trust
Stakeholders respond positively when a professional CFO is part of the management team. A CFO's expertise dramatically increases in value when raising capital, seeking outside investment, debt financing, or positioning your company for sale.
How a fractional CFO is different than a traditional CFO
You might ask, "What does a traditional CFO do that a fractional CFO can’t?"
The answer is they provide the same services. The only difference is that a fractional CFO work part-time for your company, making them the more cost-effective option for small businesses.
A fractional CFO could help increase your profit margins since you can scale services up or down based on your needs. If your company doesn't need a full-time CFO, hiring one to handle your financial processes would be wasteful.
How to find a fractional CFO aligned with your purpose
You always want to ensure that you hire top talent. Sometimes, the most brilliant talent is found through outsourcing.
But when it comes to hiring fractional CFOs — or any other employee, for that matter — it's crucial for mission-driven businesses to find someone aligned with their purpose. If your fractional CFO does not believe in your purpose, they will be less efficient and largely unhelpful since they do not understand your business.
When finding a fractional CFO aligned with your purpose, consider the following:
How would they partner with you? Does their style mesh well with yours and the company culture?
What are their expectations in working with you?
What do they value when working with clients?
What do they enjoy most in the fractional CFO role? How does that compare with what your company needs?
How have they helped their clients improve their financial operations and businesses? Does that align with your company’s opportunities and challenges?
What would their clients say about them?
Where do they see gaps in your organization’s structure and strategic planning?
What’s their communication style? What’s their average turnaround time for communications?
What financial training and skills do they have and how does that align with your business goals and needs?
Learn about your candidates and look beyond their resume — no matter how skilled a person is, their character and values will determine whether or not they will be a right fit for your company.
While there's no "perfect" or right" time to hire a fractional CFO, bringing them on earlier is better in most instances.
If you want to learn more about hiring a fractional CFO and how to get optimal results to help more people, reach out to Profit Reimagined Inc. Our team would be happy to speak with you.
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We at Profit Reimagined Inc. pride ourselves on our curiosity, expertise, and empathy. We take the time to understand how your social impact businesses work and why you do what you do. Then, we use our expertise to amplify your social impact, create a business you love, and maximize your profitability.