If you are the owner of a small business, you may have wondered if the time is ripe to hire a Chief Financial Officer to take the burden of financial planning and forecasting off your shoulders. While there is no universal answer to this question, these 5 indicators may help you decide.
1. When your workforce is large
If you have a decent-sized employee strength that is expected to continue expanding, a CFO is on the cards. This refers to any size that is getting overwhelming for you to handle on your own. As a rule of thumb, an organization having over 30 full-time employees needs a CFO. Payrolls, taxation and revenue duties may be offloaded to him.
2. When your business is growing rapidly
Businesses growing rapidly, at the rate of over 25% per year, need promptness in organizing finances, analyzing performance and keeping investors updated. A CFO might help you respond quickly to the transforming financial landscape.
3. When you deal with big data
Big data essentially refers to data that is too large – in terms of quantity, variety, complexity or speed – for traditional processing and that commands newer methods of processing. A CFO is equipped to analyze and interpret big data and offer recommendations regarding capital, cost, taxation, etc. so you may make informed decisions
4. When your business is getting complex
As long as you offer one product or service from a single site to local customers, your finances could be easy to manage. But when you offer dozens of products or services to a global audience, your operations become more complex and require the services of a CFO to help you navigate.
5. When you are looking at a merger or acquisition
When your business is either making an acquisition or getting acquired, a CFO is absolutely essential. His team can accurately target a potential acquisition and interpret reports issued by the regulatory due diligence team.
The CFO of a small businesses is expected to take a hands-on approach. Not only must he balance savings with investment to boost profitability but also manage financial, regulatory and environmental risks. Not only must he attract and retain knowledgeable financial talent but also collaborate with the information technology team to set up knowledge-sharing systems and efficient, automated processes. He must make accurate reports and forecasts and offer crucial insights into the business’ financial status. Over and above, he must liaison with banks and financial institutions, stakeholders and employees across various departments.
If the thought of hiring a full-time CFO, charging a formidable pay package, causes you discomfort, consider hiring a part-time one. A “consulting CFO” could meet with you a couple of times a week and help you manage your finances. Once you have established a level of comfort and trust, your transactions get more complex and his visits increase, you could consider hiring him full-time.
Bear in mind the above indicators and benefits of hiring a CFO when your small business needs one. He will leave you free to focus on your core competencies and, together, you can make your business flourish.