The Business Owner’s Guide to 5 Assumptions About Part-Time CFOs
When it comes to hiring part-time CFOs, there are, as you would expect, many different perspectives, experiences, and opinions.
You hear whispers of:
“A part-time CFO will cost you an arm and a leg!”
“Good luck with that… they just don’t know your business well enough.”
“You’re better off hiring someone full time to lead your vision.”
Depending on the situations, any (or all) of those could be true…
So maybe what I’m going to cover below aren’t five “myths”, but five important points that will provide you some insight as you think about the financial leadership you need in your business.
The myths in question:
1. Part-time CFOs are impossible to reach when you need them
One of the biggest concerns about part-time CFOs is that they are inaccessible.
In today’s world, we operate differently than we did even five years ago. Everything — in business and in life — happens at light speed. As a business owner, there are business decisions you need to make, day in and day out — you need to make them quickly, and they need to be informed. So you should demand responsiveness that supports that speed.
Just as it’s true in your business, in today’s world, the savvy part-time CFOs are working at a very different level of accessibility than even “being in the office” would have offered five or ten years ago. In fact, for the ones who have kept up with time and technology, their accessibility is even greater than that of a full-time CFO a decade ago.
So be sure to hire the right part-time CFO by understanding their tools for accessibility (or capacity to migrate to your own communications tools); and then set the right expectations up front. In that way, accessibility will never become an issue.
Remember: Accessibility only when you need a CFO can be much more cost effective in a small business, rather than having either a full time under-utilized CFO (or none at all).
In addition, something the more futuristic CFOs do is set up communication forums. They create an open forum for all of their clients to send in their general questions, and some even host video-live “office hours” online. The CFO then records replies and shares them with the entire group of their business owner clients. Now, this isn’t used for addressing confidential numbers and situations, but you would be surprised how much similarity there is in the general questions that all clients share.
2. Part-time CFOs cost an arm and a leg
Cost is such a critical question for business owners, and it should be. If you look at my book or any of the salary comparisons out there, you’ll see that full-time CFOs in small- to medium-sized businesses can run you anywhere from $150k-$500k per year. Those are big numbers.
So let’s focus on that:
You need to evaluate how much CFOs are charging in the context of the value they will bring your business. You need to know their “X-Factor”: Based on the value they add, how many times over will you recoup their cost … and how quickly will you recoup it?
So ask that question! And don’t pay any more than you feel makes sense for your business. Truthfully, depending on the business stage you are in, a lower-cost part-time CFO may make sense for a while. Then, like any investment, it may make sense to level up at a later stage.
Regardless of stage, though, ask any potential candidate a question like: “What kind of value are you going to bring to my business? How quickly will I recoup my cost as a result of hiring you? What are the ways in which you can drive cash to my bottom line more quickly than I can myself? ”
Experienced CFOs who are worth their price should be able to predict concrete ways in which they will add value to your company. And look for answers that involve improvements in cash flow and profitability.
A quality CFO isn’t just going to say, “I’ll give you reports every month.” A quality CFO will evaluate everything related to your financial situation, will take ownership of it, and will set you up with an information flow that aligns with the success of your strategies and tactics.
3. Part-time CFOs give cookie-cutter answers and reports
A lot of business owners assume that because part-time CFOs often serve multiple clients, that they will lack depth in their approach to serving your business. And some do lack that depth, there is no doubt about it.
But the rockstar CFOs (and there are many out there) understand that while there is a similar process to providing support, the nature of the support itself should always be unique to each client.
In your research to find a part-time CFO, ask about their process to discover your business:
Is it refined with plenty of practice?
Will it apply even in your type of business?
Can they show you the blueprint for how it works?
Can they give you examples of how they have been able to leverage that process for efficiency, but have still produced unique, customized, and fully aligned solutions for a client?
Get the name of a reference, and call them to ask those questions as well.
You can (and should) require that your CFO will create a tailor-made solution specifically for your business, challenges, and goals.
4. Part-time CFOs can’t find a “real job”
Ah, the dirty word! Let’s address the elephant in the room: consultant!
We have all experienced good and bad consultants. That is reality. In my own case, when I haven’t been happy with a consultant, the cause is usually found at the very beginning of the process: due diligence prior to hiring.
Many business owners assume that when CFOs are working part time, it’s because they can’t find a “real” full-time opportunity. I can assure you, that’s not always the case. Are there a lot of part-time CFOs who used to work full time but, for one reason or another, lost or left their jobs? Yes! So dig deep, and find out the “why” for your CFO candidate. I can promise you that in many cases, their “why”s are exactly the reason you do want them on your team: They continue to insist on their own personal and professional growth and development, and on giving their talent to the world in a bigger way.
You won’t be surprised that many large and even medium-sized business are behind the times technologically AND in their capacity to develop the full value of their employees. Many of us have left the industry for exactly that reason. We have more to give, we have more to learn, and we have more value to add than large business constraints permitted. We were good at those jobs — really good; in some cases we navigated them for years, with all of their complexity, across many industries; but in some cases knew, as well, that it was time for us to serve in a different way. Find these part-time CFOs!
As an important note: Many of my colleagues stayed in the Fortune 500 world. It was right for them. I honor them, and still learn from them to this day. In fact, my most significant mentors fall into this category. The great thing about this profession of CFO-ing is that opportunities abound for every “why”. Make sure your part-time CFOs “why” is aligned with serving you.
5. Part-time CFOs can’t be my “right hand”
Most entrepreneurs really want a right hand; a solid partner who can shoulder equal responsibility and be their go-to for all things financial. You need what a client of mine calls a “friend in the foxhole”.
A partner like that is someone you can call and talk through issues with, no matter how confidential, confusing, or potentially alarming. Sometimes those calls will be about finances, but not always. You need someone who has the capacity to fully integrate financial advice smoothly into the context of your operation strategy. You need someone who gets what you are going through and can help you to roll with the punches when it makes sense, but to charge the hill in other cases. And when you charge that hill, you want them to have your back.
So what is key? Trust.
This kind of trust has nothing to do with whether a person is part-time or full-time. This has to do with their character and your mutual chemistry. I’m sure you’ve had full-time colleagues who have never earned or cultivated that trust; and you’ve probably worked with others only moments a day who have engendered a complete feeling of reliance. It’s not about how much they’re there; it’s about how they show up when they are there; and their trustworthiness (in YOUR eyes) when they’re not there.
So, there are plenty of quick assumptions to be made about part-time CFOs. But don’t let those assumptions limit your options. The right part-time CFO can be just what you need to scale your company to the next level and help you to bring your business goals to life.
Author, Virtual CFO, and Finance Coach
"Your First CFO: The Accounting Cure for Small Business Owners" on AMAZON