On October 26, The New York Times published an article titled, “When Should a Small Business Hire a Finance Chief?” This piece deals primarily with growing businesses and some of the major issues they confront. I recommend this article as a good summary of the complex range of issues that all small businesses face.
The article defines a number of tipping points that confront companies as they grow. But the primary issue was summarized by one business owner, who said: “I needed to hire someone who could function as my business partner and allow me to step away from the books so I could manage other aspects of my business.”
Among the challenges that organizations face, the Times identified the following:
- Financial Analysis, Accounting, and Budgets, Forecasts
- Lending and Securing Financing
- Real Estate
- Health Insurance
- Accounts Receivables
- Dealing with Investors
- Due Diligence in preparing for an acquisition or preparing to be acquired.
I would add cash flow and working capital management, as well as human resources and IT management, to the list. And the CFO is critical to exit planning.
Can’t Afford or Don’t Need a Full Time CFO? Hire One Part Time
As the Times points out, “no matter how small, any company can benefit from having a finance chief to help organize its finances and track its performance.” But a full time CFO usually commands a six figure salary plus benefits. The solution, say the Times, is to hire a part-time CFO. It is sort of like a time-share condo: you get the high quality seasoned finance leader you need for a fraction of the cost of a full time CFO.