7 Essential Reasons Your Business Needs A CFO

If you’re a CEO or business owner then you will want to grow your business to a decent size. If you do, then there will come a point, early in the life of your business when you need to appoint a Chief Financial Officer (CFO). It doesn’t have to be full time and at the outset it is likely to be much better for the business to have a more flexible, part-time arrangement. However, the essential element is that you need someone (and this won’t be your accountant or book-keeper) with the right experience and qualifications to fulfill the role of your CFO.

Here are the main reasons you and your business need a CFO:-

1. Your business will fail without good financial control

The main reason businesses fail is because they run out of cash. The first thing a good CFO will do is to look at your business critically and identify where the cash is coming in and where it’s going out. They’ll then design a strategy for you to ensure that the leaks are plugged and the flows start to come in. This alone could potentially save your business.

2. They’re more than just bean counters

A CFO gives you a qualified and experienced business partner. You get someone who’s seen the successes and failures in business and knows what to look out for. With that experience, comes foresight and vision, the ability to see what is likely to happen to the business in the future and prepare for it. If a business is unprepared it can be just as devastated by a great business opportunity as it can by a disaster.

3. A CFO helps you make the tough decisions you’ve been putting off

In any business there are tough decisions that need to be made and often these involve personal relationships in the business. A CFO can help you clarify the business justification for the decisions and understand the impact of putting those decisions off. This helps you, as the CEO, to justify your decision to yourself and take the right course of action. Your CFO will also help you to step back from the business and see it in a new light. It’s often difficult to take that higher level view when you’re buried in the business unless you have someone to guide you.

4. You raise your credibility with customers, suppliers and investors

When customers, suppliers and investors get to talk to a CFO in a company, it raises their impression of the business, its size and its financial viability. Sometimes deals and investments are won on the credibility that a CFO brings. The biggest concern for your suppliers and your investors is that the business may fail and lose them money. A major concern for your customers is that you may not be around to complete a project or continue supplying them. When you have a CFO in your business it gives these stakeholders far more confidence in dealing with your business.

5. It shows you’re taking your business seriously

Is your business just a hobby or are you taking it seriously? Engaging a CFO even on a part time basis, is a commitment but one that shows that you believe in your business and its future. It shows that you are confident enough to bring a serious business professional into your organisation to help manage and support your business as it grows. It shows vision and good judgement. It shows that you’re a leader.

6. You need an exit strategy

If you have investors in your business they’ll be wanting to see their investment realised. And the biggest investor, certainly in terms of time and energy, is you. So how are you going to realise your investment? How are you going to strategically exit the business and enjoy the rewards of all your hard work? A good CFO will help you design the right exit strategy for you and your business.

7. It means you’re not alone

One of the most important roles that a CFO plays for the CEO is that of a sounding board and coach. As the CEO, the buck will always stop with you. Having someone you trust who you can turn to for sound, professional advice and guidance is invaluable. Having someone to discuss your plans, strategies and visions with has huge value and the fact that they can then help to bring those plans into practical reality is worth even more.

What you should find with any good CFO is that they are worth much more than they cost in terms of the value they bring to the business. Even if you already have a Finance Director (FD), a CFO can provide the higher level of additional experience they need to really make a difference to your business. And if you can’t make up your mind right now then perhaps you need to look back at reason number 3 and think again.