One of the biggest problems most SMEs encounter as their business grow is that they don’t easily realize when their small time hustle has turned into a fast growing business. When the business is smaller, they easily manage all tasks without being overwhelmed. But when it starts to grow you hear common complaints by SMEs “I don’t have time, or I seem to be losing money but I am not sure exactly how”. It is common place for a business owner to keep an eye on the monies at hand and at bank, and also keep an eye on the invoices going out. However, it is uncommon for them to be looking at the bigger picture, nor do they have budgets and financial forecast that covers much longer than the following month. This is usually due to a mix of being time-poor and a lack of interest.
Unfortunately, most of these SMEs and business owners cannot afford to hire a Senior finance person, notwithstanding the fact that their business needs such services. Most often times they hire a bookkeeper or less experienced accountant and/or an external tax consultant. Thus the information they use to run their business is limited to whatever the bookkeeper or accountant provides based on limited knowledge and experience.
It is then common to find a lonely owner/founder making all business decisions with little or no input from his employees. There are times these owners need someone experienced enough to share ideas with and have meaningful conversations that will take the business forward. Unfortunately they are constrained financially due to the fact that they cannot hire the caliber of people they need.
The Virtual or Outsourced CFO
This is where the services of a virtual or Outsourced CFO will help such business. A Virtual or outsourced CFO is an outsourced service specifically structured to cater to the skills gap present in businesses (Large or SMEs) that needs high-level strategic financial advice and guidance, but cannot afford to hire for such role a full-time employee.
Every business, whether operating in similar industries, is quite different from other businesses. A good Virtual and Outsourced CFO will structure his services or advice to meet the needs of each individual business.
Some of the services that a Virtual and Outsourced CFO will render will include;
* Providing advice for your business based on the information obtained from your financial records and industry trends.
* Preparing monthly financial analysis and interpreting them in a simplified manner.
* Help define key business KPIs and implement a monitoring system.
* Help your business with Budgeting and cash flow advice
* Providing advice and training for your staff.
* Most of the services will be provided remotely so you can have access to your Virtual and Outsourced CFO via phone calls, emails and video chats for most hours of the day.
One very good benefit of a Virtual and outsourced CFO is the flexibility in the fees they charge and how you engage them. Most charge a monthly flat fee which is a fraction of what it will cost to hire one full time. The fees are influenced largely by the size of your business, the level of expertise required, and the amount of time they will be required to spend working with your business.
It is very beneficial to your business to outsource your CFO or Senior Finance position. One very important benefit is the fact that you have an experienced and exposed person/ team that is helping you keep an eye on the finances of your business and also can advise you as at when it is needed. A good Virtual CFO also offers the skills of financial modeling and strategic planning whereby they help you build your ideas into scenarios for ease of decision making. That gives you an overview of the impact of your ideas and decisions.
It is very important for a business owner to take note when a small business has started showing growth signs. It is at this point very necessary to get the services of a Virtual and Outsourced CFO (if the business cannot afford to hire one full time) that can help chart the future direction of the business and help with providing financial advice and support as the business takes off on its growth trajectory.