Many business owners struggle with the question of when to bring in professional financial management resources. Certain events obviously require the assistance of a CFO, such as an acquisition, business sale or the requirement of audited or reviewed financial statements. However, most businesses would benefit from CFO services in advance of these situations or even if no such transaction is planned.
Many CEO's grow into the role of Chief Financial Officer by virtue of the fact that they run the business, often times, however, they find a majority of their time being consumed by these finance related tasks. This is not the best use of their time and often not their strength to begin with.
A few situations that may indicate that it is time to bring in some executive level financial assistance on either full time or part time basis are:
- People ask you financial questions to which you don't know the answer
- You have investors or financial covenants
- Judge business success by change in bank balance from month to month
- Have difficulty making business decision due to lack of information
- Short term spending decisions are based on funds in bank account
- Financial Reports are printed directly form QuickBooks
- Lacking a finance person with whom to discuss business strategy
- Don't understand why and where profits are being made, or lost
An experienced CFO can make the CEO better able to focus on managing the overall direction of the business. A CFO is trained in dealing with finance related issues and is better able to efficiently assess the importance of a particular matter and resolve it more easily than could someone skilled in operations or marketing.
If you find that any of the above situations apply to you it may or may not be time to hire CFO or engage a CFO Services firm, but it is definitely worth your while to talk with someone that provides these services.
Most CFO Services firms are willing to provide a free consultation to prospective clients that can range anywhere from one to four hours. This often times will come with an assessment (from their perspective) of the business and a recommended course of action.
While the purpose of this recommendation is clearly to win you over as a client it may still contain useful information that may have been previously overlooked and highlight potential weaknesses that can be addressed either by ongoing engagement or on a project basis.
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