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How virtual CFO services can help startups, small businesses maximize profits

Posted by Kanika Sinha

November 18, 2021    |     4-minute read (681 words)

As a small business owner, you may think your firm is too small to need a chief financial officer. Maybe you’ve decided to hire a CFO once the business reaches a certain size or hits a revenue target. 

But given that 82% of businesses fail due to poor cash management, according to a widely cited study by U.S. Bank, the services of a CFO have never been more important. A CFO can deliver invaluable hands-on expertise for small businesses and startups aiming for growth.

For example, a seasoned CFO brings comprehensive knowledge of business drivers, risks and how to create value. They can formulate growth strategies while providing a valuable finance-oriented perspective to company leaders. In short, working in conjunction with the CEO, a CFO can help your firm safely navigate to the next level.

While small businesses often don’t have the budget or the need for a full-time CFO, that doesn’t mean they don’t need financial strategy guidance. This is where hiring a virtual CFO service can be a solution, either part-time or on a project basis. 

By procuring the services of a CFO on a remote basis — working together via phone calls and video meetings — your business gains vital financial expertise without incurring the costs of an in-house CFO and the accompanying infrastructure.

Here are seven ways an outsourced virtual CFO will maximize your business’s profitability:

By managing growth, cash flow and expenses 

While everyone in your organization might have some responsibility in these areas, a CFO can work closely with management and staff to track these metrics and ensure performance aligns with your company’s goals.

By building the right capital

A CFO makes certain that your business accounts and cash flow are appropriate for discussions with prospective lenders and investors. 

They can also help build the proper asset base by evaluating your financial requirements and suggesting the optimal combination of stocks and bonds. In addition, the outsourced CFO will provide accurate financial reports and metrics, coupled with interpretations of that data to guide actions.

By mitigating risk

Every business needs a risk-prevention infrastructure to protect it from fraud, errors, and internal and external threats. 

An experienced CFO can identify and mitigate risk exposure by establishing appropriate financial and operational controls for your business.

By negotiating with suppliers and customers

A CFO can help your business obtain favorable credit terms and renegotiate vendor and client contracts to align them with prevailing industry trends. This helps ensure sufficient cash flow is available to keep the business running smoothly.

By providing budget analyses

CFOs are experts at comparing a business’s performance against its budget to identify profit opportunities. They can also identify the most effective ways to allocate scarce resources in a manner that aligns with the strategy of the business.

By assisting with financial analysis and modeling

A CFO will assess your firm’s financial history against industry benchmarks and competitors’ performance. This analysis will be used to inform business decisions and strengthen the bottom line.  

The CFO will also apply dynamic financial modeling to forecast cash flow and project revenue, as well as to improve decision-making to accelerate growth. 

By managing mergers, acquisitions

Your business’s growth strategy may include mergers, acquisitions or an IPO. A CFO has the critical skills needed for a successful M&A, in addition to the know-how to raise capital when organic growth opportunities are limited. 

A CFO has the skills to validate the profitability thesis of a potential M&A and evaluate its risks. They can also vet considerations such as cash flow, taxes, service or product compatibility and financial impact, negotiate terms and conditions, and fulfill compliance obligations.

Wrap-up

When done correctly, outsourcing the CFO role helps clear a path toward growth while saving your business money. You can focus your resources on building your core business so it can be more profitable. For the best return on this decision, find an outsourced CFO who has significant C-suite or operational experience corresponding with your business’s stage of growth, industry and goals.

We handle your essential business offerings so you can focus on growth.