What to Expect When You Hire an Outsourced CFO
The thought of hiring an outsourced Chief Financial Officer (CFO) has been on your mind, perhaps driven by stalled growth and advice from your mentors. Yet, hesitation shadows your resolve, fueled by fears of wasted money, loss of control, and dependency on a seemingly detached contractor. If you are thinking about transitioning to an outsourced CFO, but are not completely sold on the idea, then let’s walk through a hypothetical situation and see what one can do for you.
Here’s a journey through the initial months of outsourcing your CFO so you know what to expect.
Kickoff Call: A Surprising Start
One week after signing the contract to outsource a CFO, you dial into the first Zoom call expecting a barrage of unsolicited advice. Yes, they’ve seen your financials, but how much can they really know about your business?
“Tell me about your goals in this engagement,” the CFO begins.
You begin by reminding them you studied finance when you got your MBA, then go into the stalled growth and shrinking profit margins as of late. There are many nuances and complexities to your business – your diverse customers, your latest round of hiring, your secret sauce – and, before you know it, you’ve been talking for 20 minutes straight.
This whole time the CFO listens intently, taking meticulous notes. No judgments, no hurried conclusions—just a genuine effort to understand the intricacies of your operation.
“Thank you for sharing all that. I have a couple of follow-up questions,” they continue. And you two go on to talk for the entire hour about the business’ history.
The outsourced CFO offered you no advice – just a promise to review your financials and circle back with some thoughts.
You disconnect from the call and feel surprised by your optimism.
The Urgent Request
You put the phone in your damp palm and call the CFO, hoping they will pick it up. This is urgent and you need advice ASAP – it’s not every day your biggest customer cancels their contract. The call goes to voicemail and you curse under your breath.
“Where could they be?” you wonder, angry to be sharing an outsourced CFO with 2 other small businesses. Is your CFO helping them with urgent issues too? What good is outsourcing your CFO if you can’t reach them in a crisis?
Suddenly you get a call back, “Sorry I was in a meeting. What’s up?” Your momentary relief gives way to an hour-long conversation about the lost customer and what to do next. “I know we can work through this. I’ll have my analyst update the projections and come up with some plans. Can we schedule a call tomorrow at 8AM to go over the findings?”
You hang up worried, but grateful the team is taking action. Perhaps this CFO will earn their keep after all.
Forecast Review Call: A Shift in Perspective
As you prepare for the forecast review call, apprehensions once again cloud your mind. You already know what the CFO will say: insufficient sales, we need to do layoffs. You know that’s a problem, and don’t see how a CFO’s forecast can help you solve the issue.
However, the CFO catches you off guard by saying employee efficiency is the problem. “Seems like your productivity dropped over the past 12 months. No amount of sales will fix that… are you measuring the efficiency of your teams?”
You’ve been so focused on pushing the sales team, that you haven’t even developed an operations KPI dashboard yet. “Don’t you think our drop in revenues needs to be addressed?” you ask, skeptical.
“Yes, absolutely, and we likely need to right-size the business. But we need to think holistically about our next steps.” The CFO’s voice is calm, but firm. “Inefficient ops is a death-spiral if uncorrected. We should take our time, look at the data, and do this right.”
This revelation stirs a mix of curiosity and contemplation within you. Your ops team, not your sales team, could be the issue in your business – a perspective you hadn’t considered before.
What does an outsourced CFO do?
On the surface, an outsourced CFO manages all financial affairs and collaborates with you on business strategy. Outsourced Fractional CFO duties include:
- Financial analysis and strategic planning.
- Cash flow management and forecasting.
- Publishing monthly financial packages.
- Management of bookkeeping staff, both in-house and outsourced.
- Fraud prevention and detection.
What differentiates a good outsourced CFO from a GREAT one is:
- Curiosity in your business and ability to listen to you and your team.
- Analytic skills to drill through your financials and discover insights.
- Imagination to collaborate with you on new strategies.
- Exceptional communication everyone understands, not just accountants.
The Pivot to Growth
As weeks morph into months, the surprises and revelations from your CFO give way to recurring meetings: monthly financial reviews, department budget analysis, and quarterly board meetings. The engagement becomes routine, almost bland, but the business also gains traction. First, the profit starts to return bit-by-bit. Then, your sales team picks up momentum. Profit becomes more predictable and you find yourself free of the daily whirlwind, able to focus on the next big growth project for your business.
Every month you meet with the CFO and they provide you with some new nugget of insight. You two are now planning 6-12 months out, thinking 2 steps ahead of the other business managers.
Knowing the benefits of outsourcing a CFO who quietly closes your books and hands you useful insights each month, you laugh to think that once, long ago, you feared losing control to some dominating wolf-of-wall-street character. Instead, you feel more empowered than ever to make informed decisions.
In Retrospect
Hundreds of small business owners experience this story every year. Will this year be the year you start the journey? Are you ready to elevate your financial strategy for your business? Contact CFOShare today to explore how to outsource a CFO can drive your business forward.
