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Small Businesses: You Can’t Afford NOT to Have a CFO

Posted on April 2nd, 2020

I grew up working in the family business and have spent a lot of my adult life supporting small businesses as a CPA and finance and accounting professional, so I’ve had the pleasure of seeing many companies grow and thrive. If there’s one thing businesses that do well have in common, it’s that their leaders understand and embrace their strengths. Some are visionaries, others are great motivators or team builders. Successful business leaders play to their strengths and, just as importantly, know when to seek advice.

My message to small business owners is this: Don’t be afraid to ask for help. Whether in good times, tough times, or uncertain times like these, the experience and knowledge of trusted advisors are central to your success.

The Value of Financial Guidance

A Chief Financial Officer plays one of the most important roles in growing a business. From understanding cash flow to securing financing and participating in strategic decision-making, a CFO’s unique perspective can make the difference between success and failure. Many small businesses can’t afford a full-time CFO, so they go without this vital expertise. Luckily, a CFO consultant or advisor can provide the same advice and perspective at a fraction of the cost.

Here’s why your small business can’t afford NOT to have a CFO:

Cash Flow Analysis

Understanding a company’s cash flow is crucial to its success. In fact, studies have found that 82% of small businesses that fail experience cash flow issues, making it the number one reason for business closure.

Many entrepreneurs don’t have the financial expertise to analyze cash flow, forecast future revenue, and create an accurate cash flow budget. That’s why a CFO with experience in cash flow analysis can add tremendous value to a small business’s financial planning and decision making. By identifying which expenses are beneficial and which aren’t, forecasting revenue under a variety of different market conditions, and determining how much a business should keep in cash reserves, a CFO can help businesses avoid common mistakes and stay on the path towards growth.

Financing Opportunities

Another key area in which a CFO creates value for a small business is in identifying and securing financing. It takes money to make money, and access to capital is essential in order to invest in your business’s growth. Not only can a CFO help your company gain access to funding opportunities, they can also help determine how that capital can be spent in the most productive and beneficial manner.

In uncertain times like these, as small businesses struggle with unexpected closures or dips in revenue, a CFO’s skill set is even more vital. Emergency loans may be available to companies impacted by COVID-19, and a finance professional can help you secure those funds and prioritize their use to make it through this difficult time.

Strategic Decision-Making

In many small businesses, strategic decisions are made by a very small group of leaders. Most often, business owners are left to make major decisions on their own. A CFO advisor’s perspective can be an extraordinarily valuable addition to the strategic decision-making process. An experienced CFO who understands cash flow, investment strategies, and a business’s big picture financial situation can ensure that important decisions are financially sound and optimize profitability.

The Power of an Outside Perspective

In addition to their lower cost, CFO consultants or advisors have an additional advantage over a full-time CFO. Our wide breadth of experience working with diverse companies across multiple industries provides a unique perspective. While understanding the intricacies of each business’s financial situation, we have an outside-in viewpoint from which we can identify opportunities that leaders who are stuck in the day-to-day might miss.

As the Finance Practice Leader at e2E, LLC, I have the honor of working alongside small business leaders every day and contributing to their achievements. There’s no better feeling than helping a business owner overcome a challenge, deepen their understanding, or reach a new milestone. If you value the expertise a CFO can offer to ensure your growth and success, contact us today!

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