Most times, people involved in businesses conclude that CFOs are suited to be hired only by large enterprises, which is partly right as big companies require full-time in-house CFOs to carry out and manage various tasks related to their business. Small businesses, too, would benefit significantly by appointing CFOs whether they work virtually, part-time, full-time or look for an outsourced CFO. By providing a lot more insight into the company’s numbers, they are well poised to provide sound analysis and inputs while making decisions and chalking out strategies allowing businesses to leverage the opportunities that come their way entirely.
Here are some key advantages that hiring a CFO could bring to small businesses.
1 Easing Out Your Cash Flow
Based on studies conducted by the Australian Bureau of Statistics, over 60% of all startups fail within the first three years as they fully lose control and mismanage their cash flow. Cash is the blood of a business. And hence the cash flow must constantly be monitored religiously and proactively.
Most often, if a business faces a cash crunch, it will already be too late to make any changes to cover up the issue. Hence your company would require an accurate cash flow forecast to run operations in the short and long term.
In this way, hiring or having an outsourced CFO can help you manage your cash right and establish systems to protect it from mishaps in the future.
2 Setting Up Budgets and Financial Forecasts
Most business owners need more time to set up budgets or financial forecasts. In some cases, they may need to learn how to come up with such planning. This may affect the business in the long run as you may lose sight of opportunities that come your way and lead your business to fail to achieve the goals that it seeks to accomplish.
Since you cannot improve aspects of which you aren’t aware by not setting the proper budgets and indicators of the performance of your business, your business is simply flying blind with absolutely no navigation.
Hence, appointing a CFO to handle these tasks allows you to focus better on handling the operations while the CFO works on your business’s finances. With these accurate financial forecasts and budgets, you make sure that your business sticks straight to its course.
3 Boosting Your Profit Margins
Most often, companies are equipped to develop profit and loss reports, which they rely on to make monthly and quarterly comparisons. But how do you verify the accuracy of these reports? Can you forecast if your profits will dip by next month? Do you have the time to rectify it?
Conversely, a CFO can assist you by benchmarking your profits and financials using industry standards and averages. Companies often notice big returns by doing away with unnecessary expenditures once a CFO identifies the areas and aspects of your business that require improvements.
4 Keeping Your Risks At Bay
Whatever industry your business might be in, there will always be a risk factor associated with every kind of business. Whether it is bankruptcy, reduced profits, market downturns or the sheer unpredictability of the times you live in, any of such factors can severely impact how you operate your business.
A CFO shall know your business well and help establish strategies to manage and steer away from most risks that come your way proactively and holistically and protect your company from the unexpected.
Final Remarks
If hiring a full-time CFO isn’t feasible, you could always have an outsourced CFO manage your business perfectly, part-time or for a specific duration. In this way, you can avoid being a conglomerate business to reap all the benefits that a CFO could bring to the table.