Financial Guidance For The Small Business Owner

The CFO 4 Small Biz™ tag line is “Every Company Needs Financial Guidance ® ”.

Is yours adequate? If so then there is no need to read further. If not, you will be interested in reading further.

“The role of a chief financial officer has changed dramatically in recent years. In many growing businesses, the CFO serves as a partner to the CEO, helping outline strategy and drive the business toward its goals. …the CFO is the partner of the CEO in helping lead the company to meet business goals.”  (INC. Magazine 2/16/10)

Every company needs financial guidance; a Chief Financial Officer (CFO) provides that guidance. Most companies over $30 million will have a fulltime CFO. A small company has the same requirements of a large company; the difference is that the large company has the financial capability to have the resources in-house. The large company will have an in-house attorney, human resource manager, CFO, etc. Thus it becomes crucial for the small company to choose the right outside partners to team up with to provide those resources. It is critical for the small company to have financial guidance as it has a smaller margin of error than does the large company.

Large companies employ top executives in sales, operations and finance. They provide the strategies and management expertise required to bring in customers, competitively produce the firm’s products or services and provide the financial management and planning required to maximize the firm’s profitability and growth.

Small companies also employ top sales and operations executives, but not financial executives. Many small companies have bookkeepers or controllers who process financial transactions and generate financial reports, but who cannot provide financial guidance or offer the level of financial sophistication, problem solving and strategic financial management the companies need to maximize profitability and growth.

Companies without financial guidance are at a great disadvantage. Many small companies have sophisticated operations and complex cost and financial challenges just like large companies. They need the financial guidance of a senior financial executive, but not on a full time basis.

Small companies often seek financial advice from their CPA firms that provide tax, reporting and general financial guidance, but do not have the operational experience and skills of a CFO. The main difference is that a CFO has an operational mindset whereas a CPA has a tax and attestation mindset. This is a huge difference. I have had a Monday morning where we didn’t have enough cash for Thursday’s payroll; we did make the payroll (without borrowing) because of our forward looking cash forecast tool. This is what I mean by having operational experience.

How can a small business afford and get access to this level of expertise? In today’s world this expertise and experience is available on a part-time basis. There are many different firms and individuals offering this service. There are many different terms being used today such as virtual CFO, fractional CFO, part-time CFO, etc. It is important to look at the credentials, expertise, and experience of the firms and individuals providing this service.

You don’t just want financial guidance; you want exceptional financial guidance.

Is your financial guidance exceptional?

If not, contact me.

Dave Mayo, CPA, CGMA
Founder & Partner
CFO 4 Small Biz TM