Business Owners Can Benefit from an Outsourced CFO

By: Valerie Briley, CPA, Founder & Chief Business Driver, Reveal Business Solutions

Launching a successful small business is a major accomplishment, especially when you consider that 65% of new businesses in the U.S. fail within the first five years. That said, there are a lot of businesses that don’t achieve the kind of growth they’re capable of because their missing a crucial component – someone on their team who can analyze the company’s financial strengths and weaknesses and propose corrective actions.

CFOs Don’t Just Belong in the C-Suite

I’m describing the role of a Chief Financial Officer (CFO) and while it may not sound sexy, the experience and insight a CFO can provide a business owner is invaluable. Traditionally, CFOs have always been associated with the C-Suite at a major corporation, but in today’s market, small and medium-sized businesses can access the same financial savvy as a Fortune 500 company by using an outsourced CFO.

It doesn’t matter if you’re the best contractor, hair stylist, mechanic, or lawyer in the world; if you lack the expertise to optimize the financial performance of your business, it will slow your growth and limit success. Too many business owners think it’s enough to have a competent bookkeeper or office manager, along with a good tax accountant. While those are important, a bookkeeper won’t be able to tell you what your true costs are for delivering services, and it’s not the office manager’s job to know which services are most profitable or what your fixed operating costs are. A good tax accountant is worth their weight in gold, but their knowledge of the tax code won’t help you evaluate the outcome of raising prices 1% vs. reducing costs by 1%. An outsourced CFO can do all that and more.

Here are a few of the ways an outsourced CFO can help your business.

Implement Best Practices

The CFO is responsible for implementing best practices for all accounting procedures. This includes cleaning up past transactions and implementing processes that deliver good data and reliable financial reports. By ensuring your information is always consistent, accurate, and up to date, the CFO makes it easier for you to access lines of credit and reduce the headaches of external audits. Good financial reports also illuminate things like cash flow issues, the need to improve cost control, or areas where the company is most efficient, information which can then be applied towards operational decision making.

Develop Financial Strategy

An outsourced CFO is an expert in long-term planning and helps business owners determine exactly what steps are needed to take your company from where it is now to where you’d like to be. CFOs combine financial expertise and business acumen, with their understanding of the company’s business model and industry, to ensure that your plans for growth are grounded in solid financial criteria. A CFOs knowledge of predictive modeling, their ability to analyze macroeconomic trends, as well as incorporate non-financial information, are all valuable skills to have at the table.

Financial Forecasting & Analysis

A financial forecast is one of the most important tools an organization can have. It helps a business owner make better decisions when dealing with uncertainty by analyzing what happened in the past and the present. A financial forecast requires strategic understanding of the current and future capabilities of your company, mastery of financial algorithms and trends, as well as in-depth analysis of the competitive landscape within your industry. It is an essential part of business planning and budgeting.

Outsourcing – Only Pay for What You Need

A business that reports annual revenue of $2M doesn’t need a full-time CFO, but it would still benefit from the expertise a CFO can provide. With an outsourced CFO, a business owner only pays for what they need. It’s an investment in the well-being of your business.

If you’d like to learn more about what an outsourced CFO can do and how it might work at your business, call us at Reveal Business Solutions. We partner with business owners around the country to support their growth and ensure profitability and we’re ready to put our experience to work to help you.