Business Challenges Signaling the Need for a CFO

Business Challenges Signaling the Need for a CFO 

Mindy Barker | Barker Associates

Businesses will inevitably face various challenges, particularly as they grow. At times, the owner or CEO struggles with even identifying the root cause of the challenge, let alone understanding what solutions are available. And more often than not, the causes of those challenges can be found in the financials, and the solutions, in the expertise of a CFO. In an effort to shed some light, here are three common challenges a business faces that signal it’s time to onboard or outsource a CFO. 

Challenge 1: Slow progress because the founder wears all the hats. 

When first starting a business, especially a small one, it’s typical to see the owner/founder(s) acting in every role and performing every task in an attempt to save money. They will try not only to do their own job, but every other job, including those relating to finances. Soon, they become overwhelmed and lose sight of what they should be doing – strategically guiding the company forward to meet its goals. While the mentality behind it is understandable, this is not a sustainable business practice. 

CFO Solution 

Generally speaking, the person who is charged with running the company does not also possess the background and knowledge needed to financially steer it toward success. It’s no wonder this person gets frustrated and overwhelmed—not only are they trying to do everything, but they simply cannot make data-driven decisions without the actual data. A CFO can help clear the way with real numbers and explanations of where those numbers come from and how they can be used to benefit the company overall. By utilizing financial forecasting and modeling, the CFO can help ensure that the CEO is making the best decisions for the future of the company. 

Challenge 2: No clear understanding of company goals. 

This isn’t to say that the owner or executive board does not understand the company’s direction. They likely know exactly where they want to go. However, what they often lack is an understanding of what must happen (and when) in order to get there. Guiding a business requires milestones and goals that must be met in succession along the way. It’s imperative that the leader of a company understand how to prioritize these goals to make a long-lasting positive impact.  

CFO Solution 

A CFO is responsible for knowing the company’s target revenue, industry trends, and projecting the short- and long-term revenue and expenses through viable milestones and goals. And these will likely be different from the owner’s short-term goals. For example, an owner may think that simply getting more clients to generate more revenue is the answer to every problem. However, this isn’t necessarily the first step. While gaining more clients and, by default, more sales, is an important factor in company growth, a business needs to take a few starting steps before reaching that point. Namely, understanding the target market and increased demands of the business. Gaining clients is only truly beneficial if those clients are the correct ones and if the business is equipped with the knowledge, resources, technology, and manpower to handle the increase in operations. Otherwise, any increase in revenue will be short lived.  

Challenge 3: A lack of financial organization. 

Founders become founders because they saw a need, had an idea, and came up with a solution. But having an idea (even a great idea) and having a profitable business are two entirely different things. So much attention is focused on perfecting a product or fine-tuning a service that the intricacies of the finances often get lost in the shuffle. This lack of organization results in missed opportunities and unfounded business decisions.

CFO Solution 

Keeping finances organized to help develop appropriate strategies is simply what a CFO does. Their primary objective is to help grow a company grow financially. With a steadfast eye on critical financial detail, a CFO will consistently work with projections and help increase the bottom line. But this can only be done when the finances are organized enough to tell the story they need to tell.  

Ultimately, a CFO, whether a full-time hire or outsourced, takes the guess work and frustration out of all of these challenges (and many more) for the CEO. With financial stability and accurate future outlooks, the CEO can focus on strategy and lead the company forward. 

Barker Associates provides strategic guidance and outsourced CFO services to companies of all sizes. We can provide the higher level of strategy your company needs to grow. If you need assistance, or have any other questions, please click here to schedule a 30-minute consultation at a rate of $100.