3 Signs You Need A Cfo Role In Your Small Business

CEOs and business owners: do you need a CFO? Can you afford not to have one? These are the three signs to watch out for:

1. Your growth (or lack of growth) is out of control

Here are two scenarios:

  1. Your revenue has increased faster than you were prepared for. You’re quickly realising that your financials are becoming too complex for your company’s accountant to handle.
  2. You’ve seen a downturn in a successful enterprise. You need to make a turnaround to assure the business’ survival.

These scenarios are as different as different can be. But they have one thing in common: your growth is out of control. Either scenario is a sign you need a CFO.

If you’re a victim of your own success and are seeing your growth spiralling beyond expectations (e.g. 20 to 25 per cent year-on-year increases in revenue), a CFO can put the policies and strategies in place to ensure that you remain legally compliant with your new revenue streams as well as capitalise on your expanded turnover.

If you need a quick turnaround for your business, a CFO identifies where you are leaking capital and, more importantly, helps you devise a strategy to plug those gaps and ensure your enterprise isn’t driven into the ground.

In short, if your growth is out of control, you need a CFO.

2. Your business has become too complex to handle

You have too many staff. Your revenue streams are too complicated or too numerous. You are investigating new markets, perhaps overseas, and you need tax and legal advice. In any business life cycle, there comes a point when complexity becomes a burden.

A CFO lifts that burden. They have the skillset and experience required to ensure company efficiency. They can revamp your accounting processes, develop reports and forecasts to make sense of the variety of data now available, and perhaps most importantly, they can take command of the financial aspects of your business at every level.

In any business life cycle, there comes a point when complexity becomes a burden.

Usually this complexity is tied to revenue, but there are exceptions: a business with a $20,000,000 revenue that sells over 5,000 different products in multiple physical stores will almost certainly need a CFO. But a business with the same level of revenue with only 10 products and a single physical location may not. Complexity comes in many forms.

 

In short, if you are noticing your business is creaking under its own weight, you need a CFO.

 

3. Your strategy is no longer keeping up with your business

Many businesses start by hiring a bookkeeper. Eventually, they move on to a company accountant, and then on to a financial controller. The progression at these levels is quite simple: bookkeepers close books, accountants provide additional complexity, and controllers can provide reporting. But there’s one thing that a CFO does that these financial professionals don’t: strategy.

Rather than relying on lag metrics alone, CFOs can forecast and budget; they can strategise and provide insights into your business: what you need to do to keep growing.

This is why hiring a CFO is often seen as a watershed moment for a business. It’s a sign that you’re ready to become a leader in your industry. Leaders need forward-thinking strategy. A CFO provides that.

In short, if your strategy is no longer adequate, you need a CFO.

Summary

To summarise, if you are experiencing:

  • Fast or slow growth,
  • High levels of complexity,
  • Increased company size,
  • The need for increased strategy, or,
  • The desire to become a leader in your industry,

Then you need a CFO, contact us at ajit@mypayg.com to get more details how you can bridge the gap

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