If your business is growing and the crucial, timely financial information you need for strategic decisions isn’t prepared or available, it’s likely time to hire a CFO. But how do you hire a CFO and what are your options? You may not think you can afford to hire a CFO if your business isn’t bringing in multi-millions in revenue, but there are many options available to get the expertise you need.
A virtual CFO can help you grow your company faster and smarter and doesn’t have to break the bank. In this episode, we are talking about how to make that happen today with Jaime Staley, CPA, MSA, vCFO, and co-founder of PJS & Co. CPAs. She is sharing some guidance and tips on how to hire a CFO or a virtual CFO for your business.
What we cover in this episode:
- 02:53 – What can a CFO do for your business?
- 04:09 – What level of financial services do you need for your business?
- 11:55 – What are my options in hiring a financial expert?
- 24.51 – Where do I find a vCFO that will fit my needs?
The Top 10 Questions You Should Ask Before You Hire a CFO
This free download will help you ask the right questions to help you find a CFO that fits best for you and your business.
Feel free to use this guide during your interview process and pull the questions that are most relevant to your situation. Find the best fit and don’t spend more than you have to on service you don’t need!
What can a CFO do for your business?
We spoke on our last episode about what a CFO is, the difference between a CFO and a virtual CFO, what a virtual CFO does, and all the initial questions a company should review when deciding if, and/or when, it’s time to bring a financial expert onto your leadership team.
This episode goes into all the details on the differences, how a CFO works with your company, and when it is time to hire, as well as team dynamics. Listen to Episode #71 of The Cultivating Business Growth Podcast to learn more about virtual CFOs, outsourced CFO services, and more to learn about how this service works. The focus of this episode is hiring a Chief Financial Officer, CFO, after you’ve determined you are ready.
What level of financial services do you need for your business?
So now that you’ve decided that hiring and bringing a financial expert into your leadership team makes sense for your business, where do you start? There are a few questions you should ask yourself to gain clarity in deciding what is right for your business. Start with asking yourself these questions:
- Why are we hiring? You should think about what you really need right now. Think about what will help your day-to-day needs, what will help balance your life and your business needs and what will provide you with the guidance to make the financial side of your business better.
- What need am I trying to fill? Do I need a full-time, 40 hour per week person, or do I need a fraction of that?
- What anxiety am I trying to relieve? Understanding what your main pain point is will help guide you to the answer for your business. Do I need someone to manage people who are already doing the basic accounting work and need them to be there constantly to answer questions, or do I need some staff to get the financials in order first?
The short and easy answer to all of these questions is – it all depends on your size and individual circumstances with your business. Are you at the level that you need the basic services of a bookkeeper or an accountant to nail down the processes first, or do you have the correct processes in place to now move toward an overseer role who will guide your growth?
What are my options in hiring a financial expert?
Full-time, in-house CFO
Some business owners are at that level of their business where they have the budget and can afford to hire a full-time CFO. Revenues must be fairly substantial to justify the budget for an average CFO cost of $200,000/year. Many smaller businesses are not ready for that cost and investment just yet. It’s easy to get a case of sticker shock when doing the research and write off the option of hiring a CFO due to budget concerns.
Virtual CFO or Fractional CFO
It’s important to know that there are flexible options for a smaller company that still have the need for a CFO, but may not yet have the budget to support a full-time hire. If you need a higher-level financial expert but have found that you may not need one full-time, a part-time CFO option, such as a virtual or fractional CFO, could be an option for you.
Depending on your size, needs, and growth plans, the cost associated is a fraction of the cost of an in-house CFO. By outsourcing, you can still get the guidance you need without blowing your budget. On average, virtual CFO services can start at $60,000/year depending on your size and needs.
Smaller business owners might want to explore the option of hiring a Controller first to manage staff you may already have doing your bookkeeping and accounting tasks. A Controller would act as the head of your finance department, and perform a variety of tasks, like ensuring you’re getting paid timely, paying invoices on time, and working toward improving efficiencies in your accounting department.
Improving the finance function of your business would be the goal for a Controller, but they do not get into the higher-level strategic planning and business decisions for your business. The national average salary for an in-house Controller starts at $100,000/year. Controller services can be outsourced as well and can start at around $36,000/year.
Start with what you need and work your way up
Starting with a CFO when you may actually need a Controller can add unnecessary cost. A CFO may also have to spend their time on clean-up work or projects to fix and update financials if they haven’t been properly managed.
Think of the process as stepping stones, and each additional position in your finance department builds the financial foundation for your business. Having a great bookkeeper or accountant gets the basics done for you, but how do you know if those tasks are being done correctly? A Controller will be proactive and can bring a level of service that will confirm that those tasks are performed correctly.
Once you have your finances in order and need to have the financials reviewed from a higher, strategic level, then a part-time, fractional CFO or a virtual CFO makes sense to bring on board to then get the financial expertise that you need to either correct problems or push further growth. Adding a CFO, or vCFO, will also give you multiple checks and balances. They will look at your business from a higher level, see things that you may miss, and ask those tougher questions to make sure the finances are accurate and provide guidance to you as the owner for the future. Once your business grows to a certain level, then it’s time to bring on a full-time, in-house CFO.
Basically, the foundation needs to be in place before CFO or virtual CFO level services will be of the most benefit to you as an owner. The clarity you will get in seriously considering what you really need when it comes to financial help for your business is well worth the time. Ask the questions you need to determine what the best option is for you and your business.
Where do I find a CFO that will fit my needs?
When you’ve made your decision to hire, and you’ve gained the clarity to know what you need, now is the time to find the right fit for your company. But where do you find the financial expert you need? Hiring the right person is never easy, and it may take a bit of time to find a good CFO and the right fit for your company.
You should start with the typical first steps in the hiring process, such as posting your opening to job boards to elicit responses, but there are a few additional things you can do as well. Start speaking with colleagues, friends, and family to let them know what you are looking for, and network with your trusted contacts to see if they can provide you with a referral. Speak with a business owner in a similar business that is currently working with a CFO or financial expert to get recommendations and advice.
Explore the free consultation options provided by many virtual CFO firms to see if you can make a connection. If you currently use a CPA firm for your taxes, perhaps they also offer the kind of financial services you need or may know of a firm that offers them that they can introduce you to and provide a referral. And searching online for different services once you know what your needs are can be less of a daunting task.
One benefit of finding a good virtual CFO firm is that they usually have a team of people that can help you. They may have bookkeepers and accountants that you may need, and they also will have controllers and CFOs, so they can support you as you push your business forward and experience growth. Working with a virtual CFO firm can provide financial solutions to a business no matter what level of expertise is needed. You can contact PJS & Co. CPAs at any time to book a free discovery call.
What are the benefits of hiring a virtual CFO?
Bringing on a CFO is a large commitment for many business owners. It is usually something most business owners desire, but the cost factor dissuades them from making the decision. Many small businesses think “I’d love to have a one, but I can’t afford a CFO.” The level of financial management and insight you get in working with an expert at the level of a CFO is invaluable for the growth of your business. Obviously, if you can afford a full-time CFO, at the costs we discuss above, that’s an ideal situation because you have someone in-house focused solely on your business.
The flexibility allowed in a virtual CFO or outsourced, fractional CFO situation is probably the largest benefit most small businesses see on the onset. You are able to gain access to a high-level financial expert who can provide proactive services, like financial modeling, cash flow services, budgeting, and more for a fraction of the cost.
In addition, with a firm like ours, you gain access to an entire team rather than just one person. You can tap into a team of CFOs, CPAs, advisors, etc. who can tackle difficult situations as they arise and support you as you navigate business ownership. This level of support, with multiple meetings a month, is a value that can be seen in just a few months of working together. Feel free to read some of our case studies that highlight results.
If your business is growing and the crucial, timely financial information you need for strategic decisions isn’t prepared or available, it’s likely time to hire a CFO. Understanding where you are with your business is paramount before you decide to bring in a financial expert.
There are options and flexibility in deciding what kind of help you need, and working with experts who can help you scale does not have to be cost-prohibitive. The option to hire a part-time, virtual CFO may be just the answer your company needs without breaking the budget. We discuss various options available to you to bring the financial leadership to your company that will help you make the strategic decisions to help propel your business forward to the next level.