Working with my business coach recently who challenged me to reflect on some of the different types of clients I’ve served over the years. He said, “Think about all the clients you’ve helped. Write down a few words that describe the types of work you did for them, a few thoughts about why they hired you, and what value you provided.” 

I took the homework assignment seriously and came up with three distinct types of clients that want the type of service Strategic Voyages provides.

Type 1 – “I can’t afford a CFO!”

One type of client says, “I can’t afford a six-figure-salary plus benefits for a CFO, so I just stick with my QuickBooks lady. She is always happy and she talks to the CPA for me, so I don’t have to.” 

I can’t even begin to tell you how many times I’ve heard this. Maybe a hundred times? Maybe two hundred? So many business owners think you have to spend hundreds of thousands of dollars on a CFO, when that is simply not true! Sure, you can hire one in this pay range, but if you’re going from a bookkeeper to a full-time CFO, it’s likely going to cause massive rifts within the operations of the business. Not to mention, most businesses can’t afford to take this type of leap. So, what do they do? Nothing. They just stick with their bookkeeper and hope he or she can answer all their questions. 

Type 2 – “I’m sure he’s doing important things, but I don’t like talking to him.”

The second type of client says, “I don’t speak his language, but he always looks so stressed out and busy! I just hope he knows what he’s doing. If I have to hear one more of his boring spreadsheet talks, I’m going to scream! Whenever I ask him a question, he makes it sound so complicated. He’s hard to follow and I’m not really sure I’ve ever gotten actual advice from him other than ‘you need to stop spending so much money.’” 

This type of client doesn’t know how to maximize the value of a CFO. Oftentimes, the CFO that is serving this type of company makes things overly complicated, unfortunately, to justify their compensation. I’ve always thought it makes sense to simplify things so everyone understands. If you can’t, then perhaps you don’t understand it well enough. Or, perhaps you’re not a great teacher.

Type 3 – “We’ve always done it this way”

The third type of client says, “Well, we’ve always had one. Even though they keep leaving, we’ll just keep looking for a new one.”

These clients haven’t taken a careful enough look at their culture, their operations, and their expectations of this role to consider the possibility of getting more value from an alternative approach. There’s certainly a chance they don’t know that there’s even a fractional or part-time solution out there. Or, perhaps they can’t imagine someone doing this job more efficiently than their former CFOs who typically talk about how complicated the books are, how much time it takes to maintain, and how no one could do it as well as them. 

Do any of these comments sound like something you’ve said? You’re not alone. I hear these types of comments at least once a week. 

So, what does a fractional CFO actually mean or do? At the core of it, it’s a service that is provided on either an as-needed basis or a part-time basis. This could be temporary, like supporting the migration of an accounting system software into an Enterprise Resource Planning system (ERP) or during a season of aggressive acquisitions. It could be during a time of leadership changes or perhaps to quickly step in and support a business who just lost their CFO for any number of reasons. 

How do I know my business is ready for a (fractional) CFO? The first step is to just call and find out what it would look like for your company. Some engagements I have are very limited, because the business’s needs are very limited. That is, they only need my help for an hour or two a week. So, the cost is quite low, the efficiency of that time is very high, and business owners get exactly what they want! 

Some other engagements look more robust with needing to collaborate with internal personnel or perhaps a third party bookkeeper who maintains the books. In these instances, I’m asked to evaluate the system, consider ways for improvement, and essentially teach the team more efficient ways of getting the reports completed. Then, I’m asked to analyze them, translate them into words the business owner can understand, and forecast the financial needs of the business. 

I’ve also been brought in to organizations going through a period of rapid growth; lots of hiring, considering acquisitions, or realigning a financial structure for reporting and comparison purposes.

There’s also times when certain projects call for a specific skill set and it’s challenging to hire a full-time person for these. Some of the projects my team and I have worked on include financial software migration, implementation of an ERP, approaching business investors, going through a succession plan, documentation of financial controls/procedures, securing lending options with banks, preparing for the sale of the business, preparing for the acquisition of a business, or transitioning senior leadership.

Overall, there are some specific situations where it makes sense to consider a fractional CFO: 

More than one revenue stream or team of employees

A fractional CFO can help isolate the costs of these different revenue streams or teams of employees so they can be clearly evaluated. This could help show signs of hiring needs, needed staffing cuts, vendor inadequacies, or rising costs. 

Preparing for growth through acquisition

When considering growth through acquisition, you’re going to want to get advice from someone who’s been there and done that. And, someone who understands this is a project, meaning they get deadlines, have a sense of urgency, and can work well under pressure. 

Losing sleep over uncertainty over finances

There’s almost nothing worse than questioning your financials, your financial situation, or the person who put the financials together. If there’s even an ounce of uncertainty within your financials, it’s time to consider a different approach.

Don’t have a six figure budget for a Full-Time CFO, but the bookkeeper or accountant isn’t keeping up with mounting demands.

When a business owner is in this situation, they usually don’t know about fractional CFO support and how it could be the stepping stone from one style of support to another. A great fractional CFO can grow with the company and help set it up for future growth potential. What’s best? They aren’t full-time, don’t cost an arm and a leg, and understand the temporal nature of the engagement.

No advice from current “finance person”

This is one of the biggest reasons I got into this line of work; I saw CPAs, CFOs, bookkeepers, and “finance people” sending complicated financial statements to their clients with little to no actual advice other than “let me know if you have any questions.” What is this!? How could they even articulate their question when they don’t know what to look for? Advice around the financial state of a business is extremely important to a business’s future success. 

Think it’s time to consider a fractional CFO for your business? Give me a call. 847-802-9405.