Why A Business Should Outsource A CFO

by Michael Leshinksy

Start-ups are faced with an overwhelming amount of tricky decisions, including which positions to staff and which positions to outsource. The key is to know your strengths as a business owner and hire externally to handle less familiar affairs. In many cases, this unfamiliar terrain is finance, hiring, or marketing. According to Statistic Brain Research Institute, over 30% of companies fail because their management lacked experience in one of these fields. Outsourcing Chief Financial Officer (CFO) duties is a safe way to ensure that your finances are in capable, experienced hands.

What exactly is a CFO?

A CFO, or Chief Financial Officer, handles all financial operations for the business, sometimes working with a team. Duties will vary from small to large businesses, but some major components are:

Financial Maintenance

The CFO will develop financial practices, write a pro forma, produce reports, implement an effective system for accounts records, and control a budget. Monthly after book closing, they will review performance to evaluate what can be improved and what may have caused discrepancies. All officers should meet monthly; this is critical for the CFO to voice how financial operations should be completed going forward.

Operations

The company’s capital structure will be evaluated for the best combination of debt and equity to calculate the best cost. The CFO will decide which revenue channels to concentrate on, based on returns

Investment

The best investment strategy will be determined for the capital of the company. The CFO will also handle risk management, weighing risk and different liquidity ratios.

Forecasting/Planning

The CFO is responsible for seeking continuous improvement by suggesting more ways for the business to capitalize and presenting multiple options for avenues of growth.

Sustaining & Building Relationships

It is important for the CFO to stay up- to- date with all third party relationships, including banking, commodity exposure and interest/exchange rate exposure.

Knowing When You Need a Financial Advisor

Start-ups, small businesses, and franchises alike will find themselves in need of financial advising. Knowing when you need to call in experienced help for your business is crucial. It comes down to a combination of your knowledge, your time allowance, your interests, and your budget. Here are some questions to consider when deciding if you are capable of handling your own finances:

• Do you have expertise in any financial areas?
• How much time do you have to devote to financial monitoring and evaluation?
• Do you have a fair knowledge of investments?
• Do you enjoy reading about investments and doing research?
• What financial assistance does your budget allow for?

Benefits of Outsourcing Your CFO

Value

With an outsourced CFO, you tend to get a lot more for your money in terms of skill and experience vs. salary. The median wage reported in 2015 for an in-house CFO was $122,000 per year. An outsourced CFO on the other hand often brings a team of advisors who are up to speed with financial developments, new ways to do things efficiently and new investment opportunities. Many times, the outsourced CFO will have other services that your business can take advantage of, including capital raising and tax work. They will also have an extensive network of helpful contacts.

Time

Hiring someone to do the financial work for your business will free up time for handling daily tasks, plans for growth and other prime business concerns. If your business is experiencing a high growth period, the increased volume of responsibilities makes this a more important consideration than ever. As a start-up, it is difficult to raise capital and juggle other financial responsibilities on your own while successfully maintaining the rest of the tasks that come with starting a business. As a franchise, you may be overwhelmed with cross-team management and it will be more important than ever to have your finances in experienced hands.

Vision

Above all, an outsourced CFO will share a strong vision for the future of your company. Proven business models, perfected portfolio theory and cross-industry experience help them to achieve this vision. With a strong background in investments, they will be able to optimize your company’s funds. Collaborating with them will give you a clear picture and help to keep your finances aligned with your goals.

About Leshinsky Finance

Leshinsky Finance is a boutique consulting firm that works mainly out of Providence, Rhode Island, Boston, Massachusetts, New York, New York, and Palo Alto, California, but will assist businesses globally. Their recent projects include the launching of Isle Brewers Guild, conducting a Pawtucket, RI land feasibility analysis, catalyzing an expansion for PODS Swimming, and beginning a new position as the CFO of Founders Bloc. They are known for their expertise in real estate investments, and host a popular informative blog on their website www.leshinskyfinance.com. They also offer free financial consultations for businesses.

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