When is the best time to hire a Fractional CFO?

Aug 21, 2023

When is the best time to hire a Fractional CFO?

When is the best time to hire a Fractional CFO?

Yesterday.

When is the second best time?

Today.

Much like planting a tree, the best time to get started on things that take time to manifest is today.

We all know what’s best for us isn’t always an easy decision to make. Sadly, most business owners decide to explore the option to hire a Fractional CFO due to an event. Like an unplanned trip to the Dentist, it’s not until the pain becomes unbearable do most people make that call. Looking back, what’s the one thing they all wish they had done? Yep – call sooner.

I was at the local networking group this morning, talking to a new friend. He explained to me an all-too-common dilemma from a business contact and potential lead.

Their bookkeeper and CPA hadn’t kept the business owners in the loop of finances and cashflow. As a result, there were a mismanagement of reserves which had the owners scrambling to find funding for last minute. These were high level professionals making more than enough revenue to cover everything, but because they were not involved, and didn’t have a forward-looking leader as part of their team, they were frustrated to say the least.

Having worked closely with some of Maui’s top bookkeepers (and other highly recommended firms), I had to pause before passing judgement. It’s not their fault. Still, this is a trend I’ve seen ever since making the shift to small business accounting.

Let’s clear this up:

Bookkeepers, Big 4 auditing experienced Accountants, and CPA’s who file your taxes…

…these roles are very essential to your business, but they report the results on transactions that have already happened. It’s not their job to guide you through the decision-making process of how to plan for the future. Frankly, it’s not their job to even question transactions.

We will go easy on the bean counters 😊

Here are some critical aspects that are your responsibility to know each month, and definitely each quarter:

 

Cash Flow Management: Understanding your cash flow is paramount. Keep track of money coming in and going out to ensure you have enough to cover expenses, pay employees, invest in growth, and weather fluctuations.

 

Profitability Analysis: Know the difference between revenue and profit. Regularly analyze your profit margins, both gross and net, to ensure you’re making a sustainable profit from your sales after deducting all costs.

 

Financial Statements: Familiarize yourself with key financial statements like the Income Statement (Profit and Loss Statement), Balance Sheet, and Cash Flow Statement. These provide insights into your business’s financial health, performance, and liquidity.

 

Budgeting and Forecasting: Create a realistic budget and financial forecast. This helps you plan for expenses, set goals, and make informed decisions about growth, hiring, and investments.

 

Tax Obligations: Understand your tax responsibilities, including income taxes, sales taxes, and employment taxes. Staying compliant with tax regulations is essential to avoid penalties and keep your financial records accurate.

 

Bonus Tip: Consider enlisting the help of Maui CFO and partners. Our expertise can guide you through these areas and help you make informed decisions that align with your personal and business goals based off analysis, data, and intelligence. We’re not just here to report numbers, we’re here to understand your business, and steer it to success.

We will also work with your team and provide suggestions and best practices for more efficient workflows. This doesn’t just impact the bottom line, but rather improves employee job satisfaction and morale. Employees want to work for Leaders who value them by having their best interests at heart. Don’t wait for one of your top performers leaving (an event) to bring in someone who is an expert at process improvement.