Small businesses often struggle with Cash Flow due to the lack of an experienced CFO
According to the Service Corps of Retired Executives (SCORE), 82% of start-ups and small businesses fail because owners and managers have a poor understanding of cash flow.
How do you know if you need an outsourced CFO for your business?
Start up, Small Business, Non Profit; all businesses that likely do not have a full-time CFO. Why? Two main reasons come to mind. First, many start-ups and small businesses in today’s economic times are “bootstrapping” their operations and can’t see past the expense of paying a CFO on staff. Second, many business owners and entrepreneurs think they know enough to wing it till they can see daylight.
There are several reasons why start-ups and small businesses are making a poor decision when it comes to this line of thought. Many new business owners and even savvy local establishments have the passion for success, but lack the skills and networks to leverage good financial and debt practices. A qualified CFO can leverage receivables make a solid case for expanded funding and resources, and even handle tough audit and liability questions before they become critical complications.
Here are few more benefits of having an on-call CFO. (courtesy of The Denver Business Journal)
- Assistance in obtaining financing: Bookkeepers perform a wonderful service, but it often takes a certified public accountant (CPA) acting as an outsource CFO to
present financial statements that are suitable to submit to a lending institution for financing approval. The outsource CFO can identify weaknesses and strengths on the balance sheet and income statement and prepare the business owner with the financial information the bank will be seeking. Many times, the outsource CFO can introduce the small business to banking sources which match the company’s lending requirements and, then, help steer the business owner through the financing process.
- Developing budgets: In order to successfully grow a business, the company needs a plan for revenue and expense management. An outsource CFO can help the business owner develop a model demonstrating what the needs to be done to meet a sales goal, turn a profit, or achieve a desired gross or net profit margin. Without a budget, it is hard to run the business efficiently or understand how to manage it to become profitable. Additional models can also be built to help owners with decisions such as when it makes sense to add additional employees or identify the level of sales that need to be achieved to attain break-even profitability.
- Managing cash: Nothing is more important to small businesses than the ability to have adequate cash available to run the day-to-day operations. Many small companies do not have a tool in place to forecast cash on a week-by-week basis or to get a more forward-looking vision of their liquidity needs. An outsource CFO can build a model to forecast cash-flow requirements on both a short-term and long-term basis. The CFO can also assist management in prioritizing cash-flow needs.
You may be thinking that, as a start-up business, hiring a CFO is out of your reach. CFO ON CALL has changed all of that by providing a cost-effective solution on an outsourced basis. You get all of the expertise of having a CFO on your executive team at a price that makes sense for your business as it grows.
How do we do it? CFO ON CALL partners with small to medium-sized businesses that require project-based, fixed-term contract work or ongoing, as-needed assistance to maintain or improve the business’s financial heartbeat. Our mission is to provide all small businesses with CFO expertise to differentiate themselves in today’s competitive economy, freeing owners and managers to do what they do best: run their businesses.
Give your small business the financial, competitive advantage it needs.
Contact CFO ON CALL today at 480-256-9169 or
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