The thought of needing to hire a CFO (chief financial officer) may have never crossed your mind as a small business owner. When businesses experience unexpected rapid growth or become large enough that the financial responsibilities are becoming too much for the owner and staff to handle on their own, the investment of hiring a CFO will pay for itself tenfold in convenience. However, a full-time CFO costs an average of $200,000 per year when benefits and salary are added together, which clearly isn't a price that many small businesses are willing or able to pay. That being said, there is a way for a small business owner to be able to afford the valuable services and knowledge of a CFO. It all comes down to hiring in a nontraditional sense.
Hiring a part-time, contract CFO saves a small business owner a large sum of money without sacrificing any of the great benefits of having a finance pro among your ranks. So how does it work? A part-time CFO manages cash flow, reports financial information to management efficiently and performs other important finance-related tasks that can fall under the radar at busy small businesses. A part-time CFO can also train qualified employees to do some basic accounting work. All of these great benefits come to you without the high overhead costs of annual salaries and benefits as well as Social Security and Medicare pay-ins. (Contract workers make these contributions to the federal and state governments individually because they are self-employed.)
How to Hire a Part-Time CFO
If you think that adding a financial officer to your ranks would be beneficial, it may be time to start shopping around for the newest member of your team. Your CFO is at the helm of your business's finances, so you need to be sure that you are ready to ask the proper questions when you interview potential candidates for the job. Things to inquire about include the following:
- How has the candidate helped other small businesses take control of their finances?
- Has the candidate worked in your particular industry before?
- What can the candidate provide your company that other candidates cannot?
- What does the candidate feel is his or her biggest mistake in the business?
- Most importantly: Does the candidate have any references? Don't be afraid to dig deeply into the candidate's work history.
Is a Part-Time CFO Right for Your Business?
The New York Times suggests that a CFO should be hired as soon as a company can afford one, but if you're not sure if you can truly benefit from the services of a seasoned financial professional, the following situations are a good clue that you're ready:
- You need or want to approach investors for funding. There is something to be said for sending a financial officer to meet with potential new investors for your growing company
- You are selling your business or acquiring a new one. If you are preparing to sell the business or purchase/merge with another company, it wouldn't hurt to have a CFO assist in such a serious financial change.
- You need help with forecasting. If you need professional tracking of growth and performance before you make your next business move, hiring a part-time CFO would be incredibly beneficial.
If bookkeeping has you baffled or tracking your numbers is becoming too time consuming, hiring a part-time contract CFO should be next on your to-do list. Part-time CFOs who provide the same benefits as full-time CFOs without the expenses of a daunting annual salary and benefits are out there waiting to be hired.