How You Know You Need a CFO
Jul 22, 2024Today’s episode is all about knowing when you need a Chief Financial Officer (CFO) for your business. This decision can feel overwhelming, but it’s crucial for scaling your business effectively and ensuring you make data-driven decisions to grow your wealth.
Many entrepreneurs believe they’re never ready for a CFO because they see it as an expensive investment or a huge commitment. However, the alternative—fumbling through complex financial data and missing growth opportunities—is far more complicated and costly in the long run. When you find yourself drowning in financial statements, tax returns, and P&Ls but have no clear direction on how to convert that data into actionable business decisions, it's time to consider bringing a CFO on board.
A CFO isn’t just someone who manages spreadsheets and financial statements; they serve as the translator who unlocks the stories your numbers are telling you. They help convert data into decisions that drive your business forward, guiding you through daily cash flow management to long-term wealth creation.
One of the most rewarding aspects of my job as a CFO is aligning your business goals with your deeply personal aspirations. Often, when I ask clients about their goals, they’ll mention revenue targets like $2 million in revenue or $10 million in EBITDA. While these are important, my aim is to dig deeper. Do you want to send your kids to private school? Afford college? Donate to charity? These personal goals are crucial to understand because they add meaning and purpose to your business achievements. As a CFO, I can help you set and stay accountable to these goals, ensuring that your business activities align with your life ambitions.
Why hire a CFO? Because they add accountability, mentorship, and advisorship to your business. A good CFO acts like a coach and mentor, making sure that every financial decision serves your long-term goals. They challenge you, telling you if an investment isn’t the right fit at the moment while celebrating your wins alongside you. For instance, no one else might throw you a parade for making your first $100K or first million, but your CFO will be there to celebrate those milestones.
If the cost is holding you back, consider hiring a fractional CFO who works on an as-needed basis rather than full-time. This flexible option allows you to get expert financial guidance without the hefty price tag of a full-time executive. Fractional CFOs can be an invaluable resource, helping you make pivotal financial decisions without breaking the bank.
Think of your business journey like a road trip. You’re in the driver’s seat, but sometimes you need help navigating. A CFO serves as the GPS, holding the map, guiding you through left turns, avoiding potholes, and warning you of speed traps like IRS issues. However, it’s essential that you don’t just hand over the keys and sit in the trunk. You need to stay engaged and steer the direction of your business. No one will care about your money as much as you do, so it’s vital to stay behind the wheel while your CFO navigates.
Besides being a guide and advisor, a CFO can act as your cheerleader. We regularly check in with our clients, asking, "What are you celebrating this week?" It's crucial to acknowledge and savor these milestones because they represent the hard work and dedication you've invested in your business. Celebrating these wins not only boosts morale but also reinforces the trajectory toward achieving your larger goals.
Ultimately, deciding to hire a CFO isn’t about the revenue or profit levels you’ve reached; it’s about the scale of your aspirations and who can help you achieve them. If you find yourself struggling to understand your data or unsure how to leverage it for your business's growth, it’s time to consider bringing in a CFO. They’ll help you connect the dots between your financial data and your personal and business goals, ensuring you stay on the path to success.
What you'll hear in this episode:
04:10 Support clients, celebrate milestones, embrace entrepreneur's support.
07:14 Gusto simplifies HR processes and offers bonus.
If you like this episode, check out:
Should You Try to Scale Everything?
What Should You Know About Tax Estimates?
How Do You Build a Business with an Exit Strategy in Mind?
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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.
