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Why do I need a CFO?

Author: Larry Chester

Why does a business owner need a CFO? This is a question Larry Chester, founder of CFO Simplified, receives often. From business owners who are running profitable businesses ready to grow to those experiencing cash flow issues and everything in between (new product launches – restructures) the question of whether to hire a CFO is a very real one.  Watch the video below for Larry’s insights into the benefits of bringing a fractional CFO to your C-Suite table. 

So many business owners do the work of a CFO themselves without really addressing the unknown unknowns.  At CFO Simplified, we offer strategic finance insights to business owners who need the guidance of an experienced expert in operational finance and to those who know that there is more to their company’s profitability than what they are reading in the monthly reporting from their accounting department.  

How are you going to grow as a business? 

Every business owner is concerned about how they’re going to grow and how they’re going to really understand what’s happening in their business so they can make decisions. At CFO Simplified, we talk to business owners all the time who say, “I look at my financial statements on a regular basis. I know it’s important that I look at sales, cost of goods sold, and profitability and understand what my operating expenses are.” 

What they don’t say is that those numbers are not changing the decisions they make about operations, hiring, marketing expenses, inventory allocation, and other major choices that need to be made in the operation of a business. 

When a business is ready to grow, the insights from a CFO are essential to know what elements of the business are ready to support the growth and what elements will need to be cut back or eliminated.  Growing pains are real, profitability insights can make the process as painless as possible. 

Making decisions as a business owner 

As a business owner, it is essential that you look at and understand your income statement as well as your margins, your operating expenses, and other monthly reports. If you don’t know what those numbers are, you’re in real trouble and you need more than just a CFO. Likely, however, you do look at your financials regularly.  But, if those are the only numbers you’re looking at, you can’t make decisions on what’s going to drive additional profitability or what will make your business more efficient. Strategic financial decisions are based on more than your income statement. Strategy stems from an understanding of all of the subsidiary reports that drive those numbers.

It’s lonely at the top.  We understand that many founders and CEOs have shouldered the operational, decision-making, financial and growth burdens of their company for years.  Even after hiring a COO and many senior management team members, it falls to the founder/CEO to ensure that all of the many parts work together to the best advantage of the company as a whole.  Having a strategic financial executive at the C-suite table means that all of the operational decisions that are made can be assessed and directed based on the data from your reporting and better decisions can be made from the numbers (not a hunch, gut feeling, or guess).  

The deep dive with CFO Simplified 

CFO Simplified starts every engagement with a Deep Dive Strategic Analysis. The deep dive addresses the drivers that are influencing your profitability, efficiency, and operational workflow within your business.  By reviewing not only your financial reporting but the way your company functions, we can identify areas that, when improved, will add to your bottom line.  It actually is a deep dive into how your company operates.  How are you managing inventory, and how efficiently are you using your computer system?  Does your monthly reporting provide you with the detailed information you need to make those critical decisions to drive your business forward?  What about customer concentration, use of staff, or your banking relationship? These are all part of the deep dive. A successful CFO will tell you not just where your sales are but how decisions you make can alter profitability by reducing expenses, improving efficiency, eliminating waste, and improving the quality of the information that you get.    

Want to see the deep dive in Action? Download a sample deep dive here

Download HERE

We answer more of the questions you’re asking about hiring a fractional CFO on our post here: https://www.cfosimplified.com/cfo/hiring-a-fractional-cfo/

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