Maximize the Value of a Fractional CFO: 7 Essential Tips for Small Businesses

As a small business owner, you face many challenges when running your own company. Financial management is one of the most critical aspects of any business, but hiring a full-time CFO can be a costly and unrealistic expense for many small businesses. This is where Fractional CFOs, like those provided by FocusCFO, come in.

What is a Fractional CFO?

A Fractional CFO is an industry-experienced professional who provides part-time financial management services to a company. They can help small business owners make informed decisions, manage cash flow, and improve financial performance. To maximize the value of this valuable resource, it's important to use your fractional CFO wisely. Here are some tips to help you get the most out of your partnership.

How to Maximize the Value of Your Fractional CFO

1. Define Your Needs Clearly: Before hiring a Fractional CFO, it's essential to define your business needs. Do you need help with financial forecasting, or do you need someone to manage your day-to-day accounting? Be clear about what you need to find the right professional for the job.
2. Set Realistic Goals: Once you've defined your needs, set realistic goals with your Fractional CFO. Do you want to increase profits, improve cash flow, or reduce expenses? Work with your CFO to set achievable goals that can be measured and tracked over time.
3. Establish Communication Channels: Communication is key when working with a Fractional CFO. Establish regular check-ins and make sure that you both are on the same page when it comes to your business's financial management.
4. Utilize Their Expertise: A Fractional CFO brings a wealth of financial knowledge and experience to the table. Make sure that you are utilizing their expertise to its fullest potential.
5. Keep Them Informed: As a small business owner, you may make decisions that have an impact on your financial management. Keep your Fractional CFO informed so that they can adjust their strategy accordingly.
6. Monitor Progress: Keep track of your business's financial performance and monitor progress toward your goals. Work with your Fractional CFO to make adjustments as needed.
7. Plan for the Future: A Fractional CFO can help you plan for the future of your business. Work with them to develop long-term financial strategies that will help your business grow and succeed.

Responsibilities of a Fractional CFO: What They Should Be Focusing On

When working with a Fractional CFO, it's important to remember that they are there to help you manage your business's finances, not take over your business. They are there to support your goals. 

Here are seven key strategic areas a Fractional CFO should be working on:

• Cash flow management
• Financial planning and analysis
• Financial reporting
• Budgeting and forecasting
• Risk management
• Tax planning
• Audit preparation

A Fractional CFO can be an invaluable asset to small and medium-sized businesses. By defining your needs, setting realistic goals, and utilizing their expertise, you can work together to improve your business's financial performance and plan for the future.

How to Know if a Fractional CFO is Right for Your Business

It can be difficult to know whether or not you should continue with your existing finance team, hire a full time, traditional CFO, or bring on a part-time CFO. The decision often boils down to budget, capacity, and the complexity of your current challenges.

Key Financial Health Considerations

Consider a Fractional CFO if you answer "No" to any of these critical questions when it comes to your small business finance:

• Are you getting accurate, timely financial statements (P&L, Balance Sheet, Cash Flow) monthly?
• Is your finance team able to match your long-term business strategy to your numbers (e.g., advising on growth funding, M&A, or new markets)?
• Do you have a clear, reliable cash flow forecast for the next 3 to 6 months?

Budget & Capacity Considerations

A full-time, traditional CFO is a major investment, often commanding salaries well into six figures plus benefits.

• Do you have the need for a full-time person in this role? Most small or scaling businesses do not need 40 hours a week of high-level financial strategy and guidance. They need expertise concentrated on a few critical days per month.

• Can you afford a full-time person? If the answer is "No," or if the cost of a full-time CFO would strain your operational budget, a Fractional CFO provides the same executive-level expertise on a part-time, as-needed basis for a fraction of the cost.

The bottom line: if your business is ready for executive-level financial strategy and planning but isn't ready for the headcount or cost of a full-time leader, a Fractional CFO is likely the ideal solution. Learn more about how Fractional CFOs provide strategy and financial support for small and medium sized businesses, and discover if it's the right fit for your business by scheduling a complimentary discovery call today.

Jeff Semple is an accomplished business leader with over 30 years of experience, currently serving as a Northeast Ohio Area President. He has a proven track record in leadership, business development, team building, and financial management. Jeff is known for his expertise in implementing processes and systems to achieve repeatable and predictable results. In addition to his role as a president, Jeff also serves as a Vistage Small Business Chair, dedicating countless hours each year to helping presidents, CEOs, and business owners overcome challenges and transform obstacles into opportunities for growth.