Running a small business is a constant balancing act. From managing day-to-day operations to keeping an eye on long-term growth, it's easy to get caught up in the present. But what happens when your financial strategy needs to evolve, or you’re faced with complex financial decisions?
That's where hiring a fractional CFO comes in.
A fractional CFO provides strategic financial leadership at a fraction of the cost of a full-time CFO. Whether you're navigating growth, preparing for funding, or just looking for clearer financial guidance, bringing on a fractional CFO can make a significant difference.
But how do you know when it’s time to take that step?
If any of the below apply to your business, it's time to start searching for one.
What does a fractional CFO do for small businesses?
As a small business owner, you need to carefully plan out your finances to ensure that you have stable financial health now and enough cash flow runway to make it out of the early funding stages.
But you don't need to employ a full-time CFO to get the strategic partner your small business needs. A fractional CFO provides the same level of support at (as the name implies) a fraction of the cost.
At any given time, you can rely on your fractional CFO to:
- Improve cash flow management
- Offer financial guidance
- Design financial strategies
- Craft contingency plans
- Establish financial infrastructure
While it’s wise to bring on someone who delivers these CFO benefits as early as possible, there are a few scenarios that signal a need to look into fractional accounting services.
7 signs your small business should hire a fractional CFO
As you scale your start-up, having the guidance and flexibility of a fractional CFO becomes even more important.
1. You don’t need a full-time CFO (yet)
Especially as you’re just starting out, you likely don’t have the workload or budget to justify hiring and paying a full-time CFO. A fractional CFO can step in when needed, offering expert guidance without straining your budget.
2. You don’t have a plan for your financial future
A CFO can help you with financial analysis and planning that you can then use to make informed decisions for your business. If you don’t have a future plan, it’s time to onboard a fractional CFO to develop a clear financial strategy that aligns with your vision and gives you a north star to work toward.
3. You’re experiencing rapid growth
Scaling a business comes with increased financial complexity. A fractional CFO can help plan for sustainable growth by budgeting for new hires, forecasting revenue changes, and managing operational costs. This way, you ensure you’re using your capital wisely as you scale.
4. You’re preparing for a funding round
You can’t approach lenders or investors with anything less than perfectly accurate, clean financial reports. Instead of trying to make sense of everything yourself and hoping you don’t make any mistakes, you can hire a fractional CFO to help you raise capital in a strategic way. They’ll help you compile compelling reports with real-time data that deliver just what investors are looking for.
5. You’re facing an audit
One small mistake of missing or incorrect financial data during an audit can land you in a heap of trouble. Fractional CFOs come armed with the expertise needed to pull together the necessary reports quickly and accurately so you can get through any audit period as painlessly as possible.
6. You operate in a heavily regulated industry
If you’re subject to strict industry regulations and compliance standards, it’s vital to properly disclose your financial activities and track any changing rules. Fractional CFOs tend to work within a wide range of industries. They can quickly adapt to understand your compliance regulations and provide financial advice that meets those standards.
7. You’re business is struggling financially
Sometimes, it’s not that you’re doing so well that you need to plan for the future—it’s that you’re barely getting by as is. If you’re worried you’re not going to make it to the next quarter, partner with a fractional CFO. They can examine your financial health and put together a strategy that gets you out of a hole and on more solid ground.
Comparing costs: fractional CFO vs. full-time CFO
Now, of all the perks that come with hiring a CFO to provide fractional accounting services versus hiring someone full-time, we’d be remiss if we didn’t highlight one of the biggest selling points: the difference in cost.
Let’s get this out of the way: the average CFO salary is $445,500 a year.
That’s not just unrealistic for small businesses—it’s unfathomable.
Meanwhile, a fractional CFO typically charges around $300 per hour. And remember you’re paying them for a fraction (no pun intended) of the time that you would a full-time employee.
When it comes to how much a fractional CFO costs versus a full-time hirer, the former is a much more feasible option for small businesses.
Not all fractional CFOs are the same
This is your business. Your livelihood. Your dream come to reality.
You can’t put it in the hands of just anyone. You need someone on your side who understands the challenges small businesses face and is ready to roll up their sleeves and work right alongside you to ensure the business’s success.
At Hiline, we become your strategic partner in turning financial data into a roadmap for growth. From specialized, industry-specific financial support to done-for-you reports and presentation coaching, we give you all the financial planning tools you need to realize your financial future.
Reach out to our team today to learn more about how we help you make confident business decisions.
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