Running a small business can be both exhilarating and overwhelming at the same time.
As a small business owner, you wear many hats, from ordering supplies to making hiring decisions. And while you clearly excel in certain areas, finance and accounting may be particularly challenging and time-consuming.
This is where a Chief Financial Officer (CFO) comes in.
KEY TAKEAWAYS:
- Small businesses are the backbone of the U.S. economy and account for the majority of the jobs in the United States today.
- Running a small business can be exciting, but daunting as well.
- Deciding whether or not you should outsource certain jobs is a big decision that can make a significant difference in your payroll and the overall operations of your organization.
- Whether or not you should outsource CFO services can be determined by asking yourself a series of questions regarding your current needs, budget and long-term plans for your company.
Hiring a Chief Financial Officer is often a big decision that most small business owners will have to make at some point.
Deciding whether you need one to be full-time on your payroll or if you can just as easily get by with outsourced can end up making a big difference in your company’s bottom line.
The good news is, you are not the only business owner who has had to struggle with this decision. Take a page from those who have come before you and ask yourself some of the following questions to help determine what level of financial expertise is going to best to meet your company’s needs, while ensuring that you make the most strategic and cost-effective decision for your current financial situation.
Unlock Your Business Growth with Expert CFO Services
Gain strategic financial insights, optimize cash flow, and drive long-term success with outsourced CFO expertise
In the Driver's Seat: Why Small Businesses Equal Economic Success in the U.S.
While big corporations might get a lot of attention for their role in economic growth, it’s the small businesses that employ more people and are much more consistent and resilient when times get tough.
According to Forbes, small businesses of 500 employees or fewer make up 99.9% of all U.S. businesses and 99.7% of firms with paid employees. Numbers like this bring home the realization that our economy thrives when small businesses do.
Here are some of the biggest benefits that a small business can offer:
Job Creation:
Small businesses are the backbone of job creation in the U.S. They account for a significant portion of new jobs, helping to reduce unemployment rates and providing opportunities for diverse talent. Small businesses often create jobs in local communities, contributing to the overall economic health of the area.
Economic Diversification:
Small businesses contribute to economic diversification by offering a wide range of products and services. This diversity helps to stabilize the economy by reducing dependence on a few large industries and spreading economic risk.
Innovation and Competition:
Small businesses drive innovation and competition in the market. They are often more agile and willing to take risks, leading to new products, services, and business models. This competitive spirit encourages larger companies to innovate and improve, benefiting consumers with better options and prices.
Community Support:
Small businesses are deeply rooted in their communities and are more likely to reinvest their earnings locally. This support helps to strengthen local economies, create a sense of community, and improve public services. Small businesses often sponsor local events, donate to charities, and support schools and other community initiatives.
Customer Focus:
Small businesses have the advantage of being able to provide personalized customer service and build strong relationships with their customers. This focus on customer satisfaction can lead to higher customer loyalty and positive word-of-mouth referrals.
Resilience and Adaptability:
Small businesses are often more resilient and adaptable in times of economic uncertainty. They can quickly pivot and adjust their strategies to meet changing market conditions, ensuring their survival and continued contribution to the economy.
Entrepreneurial Spirit:
Small businesses embody the entrepreneurial spirit that drives economic growth and innovation. They provide opportunities for individuals to pursue their passions, create wealth, and achieve the American dream. This entrepreneurial culture fosters creativity and inspires the next generation of business leaders.
Small businesses are the backbone of the U.S. economy, fueling job creation, driving innovation, and embodying the entrepreneurial spirit that defines the American dream.
Supporting small businesses isn’t just a nice gesture; it’s essential for the continued growth and prosperity of the entire nation.
Boost Profits & Reduce Financial Risks
From financial planning to cost-saving strategies, an outsourced CFO can be your key to smarter business decisions.
Big Needs for Small Business: Questions to Ask Before Hiring a CFO
As a small business owner, you understand how to take risks, think outside the box, and try new ideas. You also know when to let go of a concept that is not working or pivot in another direction when necessary. You are innovative, and this makes you good at what you do.
But now you find yourself at a crossroads.
You need to hire help for your financial operations but aren’t sure which way to go.
Do you bring on a full-time CFO to handle all the aspects of financial management for your business? Or could an outsourced chief financial officer work just as well for your growing operation?
You don’t want to spend unnecessary money…but you also don’t want to underfund a crucial role in your company.
Here are some key questions you can ask yourself to determine what type of financial expertise and support your business needs:
1. What Are My Business's Financial Needs?
Understanding your business’s financial needs is the first step in deciding whether to hire a full-time CFO or outsource CFO services. Assess the complexity and scale of your financial operations. Do you need someone to handle day-to-day financial data analysis and accounting tasks, or do you require someone to be more strategic and work toward consistent business growth?
- Basic Financial Management: If your needs are tasks such as bookkeeping, managing financial statements, managing payroll, and tax filing, an outsourced CFO on a part-time basis will be perfect for your organization.
- Strategic Financial Planning: A fractional CFO can be ideal for helping with long-term planning and many outsourced CFO companies have individuals on staff who excel in this area.
2. What Is My Budget for CFO Services?
Budget constraints are a significant factor for small businesses. Full-time CFOs come with a higher salary and benefits package, which may not be feasible for every small business. On the other hand, outsourcing CFO services can provide you with expert financial management at a fraction of the cost.
- Cost-Effectiveness: Outsourcing CFO services allows you to pay only for the hours you need, making it a cost-effective solution for small businesses with limited budgets.
- Value for Money: Compare the cost of hiring a full-time CFO with the potential value they bring to your business. Consider the return on investment (ROI) and whether the benefits justify the expense.
3. How Much Financial Expertise Do I Need?
The level of financial expertise required depends on your business’s stage and industry. Evaluate your current financial processes and identify gaps where a CFO’s expertise could be beneficial.
- Industry Knowledge: An outsourced CFO with experience in your industry can provide you with valuable strategic financial insights and best practices tailored to your business.
- Specialized Skills: If your business requires specialized financial skills, such as mergers and acquisitions (M&A) or risk management, outsourcing CFO services can give you access to the right financial experts (that you then don’t have to pay to be on your payroll when you don’t need them.)
4. How Much Time Can I Dedicate to Financial Management?
Managing finances can be time-consuming, and as a small business owner, your time is valuable. Consider how much time you can realistically dedicate to financial management without neglecting other critical aspects of your business.
- Time Constraints: If you find yourself constantly overwhelmed by financial tasks, outsourced services can free up your time to focus on growth and innovation.
- Delegation: A full-time CFO can take full ownership of financial performance and management, allowing you to delegate responsibilities and concentrate on other areas of your business.
5. What Are My Long-Term Business Goals?
Your long-term business goals should guide your decision on whether to hire a full-time CFO or hire an outsourced CFO. Consider how a CFO can help you achieve these goals and what level of involvement is required.
- Growth and Expansion: If you have ambitious growth plans or are looking to expand into new markets, an outsourced fractional CFO can provide the strategic guidance and financial planning needed to keep your company’s financial health high while you’re going through this period.
- Sustainability and Stability: If your primary focus is on maintaining financial stability and sustainability, fractional CFO services can also provide you with the necessary expertise without the long-term commitment of a full-time hire.
6. How Important Is Flexibility?
Flexibility is another crucial factor to consider. Outsourcing CFO services offers greater flexibility compared to hiring a full-time CFO. This can be particularly beneficial for small businesses that experience fluctuations in workload and financial needs.
- Scalability: Outsourcing allows you to scale services up or down based on your current needs, making it an adaptable solution for businesses with varying financial requirements.
- Temporary Needs: If you have a temporary project or need assistance with specific financial tasks, outsourcing can provide the expertise you need without a long-term commitment.
7. What Is the Availability of Qualified Candidates?
The availability of qualified CFO candidates can influence your decision. In some cases, it may be challenging to find a full-time CFO with the right skills and experience within your budget.
- Talent Pool: Outsourcing CFO services gives you access to a broader talent pool of experienced professionals who may not be available for full-time positions.
- Immediate Access: Outsourced CFO firms often have a team of experts ready to assist you, providing immediate access to financial expertise without the lengthy hiring process.
8. How Will the CFO Integrate with My Existing Team?
Integration with your existing team is essential for seamless financial management. Consider how a full-time or outsourced CFO will fit into your business culture and work alongside your current staff.
- Cultural Fit: A full-time CFO will become an integral part of your leadership team, so it’s essential to ensure they align with your company culture and values.
- Collaborative Approach: An outsourced CFO can work collaboratively with your team, bringing expert financial oversight while complementing your in-house capabilities.
Scale Your Business Faster & Smarter
Swiftbooks provides expert CFO services tailored to your company’s unique growth needs—without the full-time cost.
Find Your Path to Success with Swiftbooks
Deciding whether to hire a full-time CFO or outsource CFO services is a critical decision that can significantly impact your small business’s financial health and growth potential.
By asking the right questions and carefully evaluating your needs, budget, and long-term goals, you can make an informed choice that best suits your business.
And when you're ready to make that decision, turn to Swiftbooks for help.
Swiftbooks is a comprehensive accounting service that can provide your small business with everything from bookkeeping and tax planning to payroll management and financial strategy services. Our services can be customized to fit your needs today and grow with you as those needs change tomorrow.
We know that in order to take your business to the next level you need a team behind you.
Swiftbooks is ready to be a part of yours. Reach out to learn more today!
