In business, timing can mean everything – especially regarding significant decisions like hiring a Chief Financial Officer (CFO). For Australian small business owners, pondering whether they’re earning enough to afford a CFO is a typical stage. But the real question should be, can they afford not to have one?
Understanding the Role of a CFO
Before we delve into the financial considerations, it’s crucial to understand what a CFO can bring to a small business. A CFO doesn’t just manage your books or handle day-to-day accounting tasks; they strategies for growth, manage financial risks, optimise cash flows, and ensure that every economic decision aligns with the company’s long-term objectives. They’re the navigator in the complex waters of business finance, regulatory requirements, and strategic investment.
Signs You Might Need a CFO
1. Your Business is Growing Rapidly
Managing the financial complexities can become overwhelming if your business is experiencing significant growth. A CFO can help steer this growth strategically, ensuring sustainable expansion.
2. Financial Management is Becoming a Burden
When business owners spend more time managing finances than focusing on their core business, it’s a sign that a CFO’s expertise might be needed.
3. You’re Planning to Scale
Scaling a business isn’t just about increasing revenue; it’s about managing the financial implications effectively. A CFO can provide the strategic insight needed to scale wisely.
4. Complex Financial Transactions are on the Horizon
A CFO’s expertise is invaluable, whether securing funding, managing mergers or acquisitions, or navigating intricate tax landscapes.
Affording a CFO
Look Beyond the Salary
When considering the affordability of a CFO, it’s essential to look beyond the salary expense. The right CFO can identify cost savings, uncover revenue opportunities, and prevent costly financial mistakes.
Consider a Virtual or Part-time CFO
A virtual or part-time CFO is an excellent interim solution for businesses still waiting to commit to a full-time CFO. This approach provides access to expert financial advice at a fraction of the cost.
Assess Your Financial Health
A general rule of thumb is to consider hiring a CFO when your business reaches a turnover of AUD 5 million or more. However, this isn’t a one-size-fits-all benchmark.
The Bottom Line
Hiring a CFO is less about reaching a specific earnings figure and more about the value they can add relative to the costs. The right time is when your business complexity and growth ambitions outweigh your current financial management capabilities. By embracing the expertise of a CFO, either full-time, part-time or virtually, you’re investing in your business’s future success.
For small business owners across Australia, hiring a CFO should be weighed carefully, considering both the immediate financial impact and the long-term strategic benefits. It’s a pivotal step towards surviving and thriving in today’s competitive landscape.