Summary
- Right now, a continuing recession is putting businesses of all kinds at risk of running into financial difficulty, if not insolvency.
- Small businesses, in particular, are at the most risk of such poor outcomes.
- To make every dollar go as far as it can when they need it most, even small businesses should consider bringing an experienced money manager onboard to chart their course through the downturn.
- An experienced business financial manager can save a company more than the cost of their salary.
How much time have you spent on your company’s finances this year? Probably more than you’d prefer. Working on budgets, financial strategies, taxes, contingency plans, and more all likely take up a ton of your average workday.
And right now, these decisions matter more than usual. With the pandemic-driven recession in full swing, even the slightest financial missteps can spell disaster. Furthermore, if you don’t know what you’re doing, you might be at an even greater risk of making a catastrophic mistake.
It’s why your business needs an experienced financial manager to help out. In other words, your small business needs a CFO.
What is a CFO?
A CFO is your business’s Chief Financial Officer. They handle many things, but the easiest explanation is that they’re the jack of all trades for anything that deals with, or might deal with, your company’s finances.
They help you develop a strategic growth plan, annual budget, cash management, tax preparation, audits, and even board meetings. But their roles go beyond just this. They can also help you find investors and build relationships with potential lenders if that’s what your business needs.
They bring the kind of experience to the table that a business needs to weather a downturn. They also serve as an internal advocate for the business’s best financial interests. That’s essential in a downturn because business owners are often blinded by their desire to hang onto their pre-recession plans and don’t make the difficult but necessary choices that hard times demand. In this particular instance, a CFO can make or break a business’s survival odds.
Does My Business Need a CFO?
Chances are that you have enough on your plate; not only do you need to learn everything you need to know to run a business, but you still have to handle your business’s day-to-day operations.
Plenty of otherwise successful business owners have gotten themselves in trouble by not putting enough back for taxes, or otherwise not understanding all aspects of the United States tax system. A CFO handles all of your company’s tax concerns and more.
They’ll make sure that you put enough money away for a rainy-day fund, stick to your budget, help you craft that budget, and build relationships between potential lenders and investors.
And now, with revenues likely depressed, and financial lifelines harder to find and even harder to secure – being adequately prepared is mission-critical.
So, yes, your business needs a CFO, and the truth is the longer you go without one, the more money you’re losing out on.
How Can a CFO Help Your Business?
When it comes to having a successful business, you need to have successful finances. A CFO gets you there. How much should you spend on marketing? How much debt should your company take on? What do you do with the revenue that is coming in?
These are all questions that a CFO will help you answer. They’ll work with you to develop a growth strategy for your business, so you’re not only in good shape now, but in even better shape tomorrow. They’ll also help to build realistic financial forecasts that can guide decision-making in the short term. That’s critical in hard times when economic conditions might shift constantly. A CFO can anticipate and help you plan for those shifts.
The alternative is that you can spend hours trying to get up-to-date with all the current tax codes, ideal debt ratios, investing options, and even build relationships with board members. You might think you can handle it, but CFO’s go to school for years to master it, and a few quick Google searches won’t get you there.
Your CFO will handle all the financial aspects of your business and keep your expenses under control, so you can focus on what you do best — running a business.
How Much is Your CFO Worth?
A good CFO is priceless. That might sound a little cliché, but the truth is that a good CFO won’t just help to increase your business’s revenue stream, but they’ll also make sure that your business is sticking to a budget and can pass an audit.
This might sound easy, but the saying that you don’t know what you don’t know holds true with finances. If you aren’t tracking where every dollar is going, you don’t know how you might be wasting them.
Even worse, you might be doing the best you can to keep up with all the current tax codes and regulations, but if you don’t know about something vital, you can still find yourself owing a lot of money and facing a ton of fines. A good CFO gives you one less thing to worry about.
Why CFO’s Matter Even More During COVID
Part of a CFO’s responsibilities are strategic thinking and financial planning; these two skills are paramount to a successful business during the era of COVID-19. Of course, it would have been nice if you had a CFO that put you in a spot to weather the pandemic, but it’s not too late to get one now.
You’re going to need a strategy to be successful in this rapidly changing business world. Can you turn a profit while at 50% capacity? Is it worth it to start an online presence? Do you need to lay off employees, and if you do, how will that affect your business loan from the government?
For all these reasons and more, Forbes notes that a CFO’s role is expanding post-COVID, making them more valuable now than ever.
Wrap-Up
When you’re contemplating CFO services for your business, you need to do your homework. That’s because a CFO is going to be responsible for your business’s financial well-being and strategic planning for years to come. Getting the right person for the job can be the difference between having a company that takes off and one that crashes and burns.
