According to the Bureau of Labour Statistics (BLS), 45% of businesses fail within their first five years. This is why it is very significant for new businesses to have a strong financial strategy.
Think of your business as a race car. The businessman is the driver who drives it towards the end line (objectives). But a race car that performs well has to have a good crew that keeps it running smoothly and at its best – here is where your CFO comes in.
A CFO is not just someone who crunches numbers. They are your strategic financial ally, seeing to it that your enterprise has the fuel (capital) required for its journey and the correct pit stops (financial plans) to stay ahead of rivals.
It’s a dream of every organisation and startup to follow the footsteps of MNCs like Google, Microsoft and Tesla. However, a major issue that startups often face as they grow is compliance, especially when it comes to cleaning up the messes accumulated over the years.
We know that CFO sounds big and expensive, but all successful big companies have a CFO. To be honest, they are costly. The average salary of a CFO ranges from $130,000 to $200,000 per year.
With budget constraints, it’s super expensive for startups to hire a CFO. But this is where Virtual CFO fits perfectly in your business. They are reliable and certified professionals. And the best part is you can hire them whenever you need them. They cost 70-90% less than a full-time CFO.
I Know CFO, But What’s A Virtual CFO?
A virtual CFO, also called a fractional CFO, is a vetted professional who Virtually provides CFO services to companies or startups on a part-time or project basis. They have a similar skills set and provide strategic advice as any in-house CFO would, but at considerably lower prices.
Values That A Virtual CFO Offers To Businesses
If your business is making big financial decisions without an expert, then it could be in trouble. A virtual CFO is like a compass that guides a business out of financial cyclones.
The skills and neutrality of a VCFO can be transforming for any expanding SME. This improves performance, resolves challenges, and allows managers to focus on key growth drivers.
Here are some key ways in which Virtual CFOs can add value to small businesses and medium enterprises:
- Strategic Financial Leadership: An experienced VCFO is a financial guidepost, and has the skills and understanding to inspire your accounting department towards meeting corporate goals. They provide advice to the management in difficult situations.
- Cost-Effective Expertise: Full-time CFOS are expensive for SMEs. You can get a VCFO who provides expertise at the CFO level at an affordable rate and is flexible enough to meet your needs, thereby reducing costs while getting the best talents around.
- Improved Financial Performance: By having a VCFO you take control over cash flows, profitability, efficiency gains and waste cuts. They offer insights into operations and KPIs which drive decisions better.
- Support During Growth & Change: Increases in size or changes introduce new risks and pressure points.VCFO helps manage those challenges, forecast scenarios, and keep things on track.
- Sounding Board for CEO: A VCFO acts as an experienced, objective advisor to the CEO/owner, providing a sanity check on ideas and key choices from a financial perspective.
- More Time for Core Business: By relieving you (owner/ CEO) of financial responsibilities a VCFO lets you focus your time and mental energy towards areas that will yield maximum benefits for the company.
How a Virtual CFO Drives Value-Based Management?
A Virtual CFO looks at financial statements and finds the main levers of value. Then, they match how the business uses them to what creates value. This ensures that every action in the organization boosts its net worth.
This makes it attractive to investors and other stakeholders. Also, a VCFO can teach VBM principles to management teams. This creates a value-focused culture in an organization, which improves corporations’ finances.
With his or her strategic financial view, VCFO will help the company to make informed decisions that focus on long-term value over immediate results.
