The Importance of CFO Services for Scaling Your SMB

7 min read

Most often, a business’s financial strategies consists of covering costs, staying open, and sustainably turning a profit.

While these endeavors are reasonable and necessary, they likely won't result in business growth. If you want to bring on additional clients, expand to new markets, and grow your business's impact and profits, then you will need to do so deliberately with a business plan and financial strategy designed for growth. To achieve business growth, your financial strategy must look to the future, considering and supporting the business's goals while strategically budgeting to scale the business.

This type of financial strategy and planning might seem like a complicated endeavor because it is complex with countless factors to take into consideration (i.e. the economy, your business's numbers, your goals, the market, the industry, regulations, and more). That's why this type of complex small business financial planning is typically relegated to a company's chief financial officer (CFO). CFOs are individuals with considerable knowledge, experience, education, insight, and know-how about business finance and economics. CFOs can talk with business owners about the future vision they have for their companies and then design and implement a financial operating framework to support the company's progress toward achieving those goals and turning an imaginary future into a reality.

So, if you can just hire a CFO, then the problem of planning for your business's financial future and growth seems simple enough to solve. With the average salary of a CFO in the U.S. ringing in at $434,315, the average CFO has a high price tag - one that is way beyond the typical SMB's budget.

However, SMB leaders need not be dismayed. There is a simpler, much less expensive, and often more effective solution readily available - outsourced CFO services. Plus, with contemporary, cloud-based technology and communication tools, working with an outsourced CFO has never been easier or more effective than it is today.

What Are Outsourced CFO Services for SMBs?

Outsourced CFO services are a type of knowledge process outsourcing in which a business contracts an external, third-party CFO with an extensive background, experience, knowledge, education, and/or industry insights to provide advice and guidance regarding the company's financial strategy.

Read More: How Much Do Outsourced CFO Services Cost?

Scaling Your SMB With CFO Expertise

Outsourced CFO services can be useful in a variety of situations, including the growth or scaling of a business.

Strategic Financial Planning for Business Growth

An outsourced CFO can help guide your business into or through periods of growth. A CFO can provide advice regarding the structure of your company's finances and how best to use your finances to maximize growth potential and profits - without making the common mistake of growing too fast for your finances and operations to support. 

Smarter Resource Allocation and Time Investment

An outsourced CFO can also evaluate your business during periods of growth to improve your resource allocation and the time investments occurring in your business to minimize waste and maximize ROI. A CFO can help implement, use, and evaluate systems that collect the data that makes it possible to evaluate every aspect of your business and its operations. Reports can then be generated and metrics can be tracked to ensure your business maintains financial health as it works toward its goals.

During periods of growth, lean operations are necessary to ensure that resources are being invested in the proper revenue channels and in expenses chosen strategically to help support the growth of the business. An outsourced CFO can use your business's financial data to identify aspects of your business that can be strengthened and aspects of your business that should be focused on to maximize the profits and cash flow that will help to facilitate growth.

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Optimize and Automate Processes

An estimated 75% of bookkeeping and accounting tasks can currently be automated, and this number stands to increase with the incorporation of artificial intelligence tools in bookkeeping and accounting software.

Outsourced CFO service providers are focused solely on the financial function of businesses. As a result, they're experienced and knowledgeable in implementing and using the most advanced tools and technology available for bookkeeping, accounting, and enterprise-wide management.

An outsourced CFO can objectively view your current processes, provide suggestions for improving these processes, and assist you with the implementation of updated tools, technology, processes, and procedures.

Better processes and procedures have a direct, positive impact on efficiency, accuracy, and productivity to deliver a substantial ROI through overall operational optimization. With increased efficiency and improved operations, your business will be better able to handle expansion with employees free to use their time on high-level, high-value tasks.

Read More: What's the Difference Between a Financial Controller and a CFO?

Scale Services to Match Your Business's Needs

Outsourced CFO services can be readily scaled to match your growing business's changing needs. As a result, you don't need to hire in-house employees to meet expanded needs during a period of change or growth. Conversely, you won't have to worry about scaling down in-house employees after the completion of a major project or transition. You can simply pay for the services you need as you need them and not pay for unnecessary services.

Already Have a CFO? You Can Still Benefit From Outsourced CFO Services

Small businesses and mid-market companies that already have an in-house CFO can still benefit from outsourced CFO services. An outsourced CFO works closely with an internal CFO and can take some of the pressure off of an in-house CFO who is stretched too thin with their current responsibilities.

Additionally, businesses and in-house CFOs should think of outsourced CFO services as a resource that can be tapped into in exceptional circumstances. Outsourced CFOs can help businesses with specific projects, opening new locations, mergers and acquisition processes, expanding into new markets, or research and development.

Outsourced CFOs can also provide an invaluable outside, objective, third-party perspective on your business's operations and finances. When an internal CFO is too close to the business, a fresh perspective can help your CFO spot overlooked problems and opportunities.

Experience a CFO's Impact on SMB Success in Your Business

Any business readying itself for or already undergoing a period of transition, transformation, financial difficulty, or growth can benefit from outsourced CFO services. An outsourced CFO can help you develop and implement a financial strategy through the careful process of budgeting, keeping thorough records, and making sure your business stays on track to achieve its goals.