How It Can Help You Grow Or Stabilize Your Business
by Julia Paulus
If you’re an entrepreneur with a newly established business, a program such as QuickBooks may be all you need to handle the finances. But when your business begins to grow, keeping track of the finances becomes more complicated.
You may not have a need for a full-time chief financial officer but it might be a good idea to hire a part-time CFO before you find yourself in a crisis.
"When a business gets to the stage or size when the owner is delegating responsibility and needs help staying on top of what they are no longer intimately involved with, then you need a controller, if not a CFO," says Dale Furtwengler, owner of Furtwengler & Associates PC, which works to link financial and operational success. "The CFO goes beyond a controller because they have a much broader business background, understanding everything from marketing to setting pricing to scripting negotiation."
The job of a CFO is to maintain the administrative side of a company, just as other executives maintain the sales and manufacturing aspects of the business.
"The weak point in most organizations is keeping the wagons on the wheel with the administrative side," says Dick Sacks, owner of The Sacks Group, which serves as a free standing accounting department. "The function of the CFO is to maintain the same level of quality internally as the owner does with the product or service of the company. It’s all about keeping the balance between all three functions. So the CFO needs to have as loud a voice as the other two functions and delineate the company’s financial and administrative needs to stay in sync with the others."
When a business reaches the point in its growth where a CFO is needed, it’s inevitable that business partners, such as banks or vendors, will request more financial information.
"Once you’re applying for loans, asking for lines of credit and keeping track of receivables becomes harder, you need to kick it up a notch," says Sacks. "Or, if your business has grown and you’re in a circumstance where taxes are becoming an issue, like multistate taxes, then you need to seek outside help."
According to Furtwengler and Sacks, the following are common reasons businesses find themselves in need of a part-time CFO:
n They set unbalanced goals when it comes to revenue vs. profit growth.
n They don’t know how to quantify the value of a product or service.
n They don’t understand a balance sheet.
n They have too much growth.
n They don’t recognize a bad sale.
"If a company doubles volume in a year, their internal controls are often not ready to fulfill an order," says Sacks. "Cost controls have to be good, and if an administration’s platform is inadequate, it will collapse."
Though a part-time CFO might be enough to meet a company’s needs, he or she must work enough hours to fulfill all required duties and make an impact on the business, according to Sacks.
"You can’t play a role in an organization by showing up once every six weeks," he says. "As a part-time CFO, you are taking a seat on the board of a company. You need to make your presence felt to support that end of the company."
For a CFO to make his presence felt, he must make an impact on the business’s owner, and that can be a major challenge.
"The biggest problem a part-time CFO has, or any CFO, is getting the attention of the principal, and the CFO has to be there to do that," says Sacks. "If a company is in bad enough shape, the principal will listen. Unfortunately, most financial corrections are made after a crisis."
He recommends hiring a part-time CFO before you find your business in a crisis situation.
"A part-time CFO can be used to turn around a business from being crisis-managed to looking forward, but they can also strengthen the platform a business stands on before that point," says Sacks. "It’s important to plan ahead. Financial and administrative strengths are how companies grow. If you neglect the money side but have the finest products and services, your company will be off-balance. The marketing and operations of a firm are the basis for growth."
A part-time CFO can keep that growth heading in the right direction.
"It allows companies on good growth patterns to continue and accelerate their growth and be comfortable knowing that they are not going to make a huge financial mistake," says Furtwengler.
In addition, hiring a part-time CFO instead of a full-time one will save your company money.
To find a part-time CFO, contact the Missouri Society of Certified Public Accountants, CPA firms, or colleges and universities, or simply ask around.
Hiring A Part-Time CFO