How do you use a fractional CFO to grow a business?

Growing a business isn’t easy, but without experienced financial know-how, it will be almost impossible.

Most CEOs are great at disruptive thinking, growing the customer base, product development and the big picture but may need extra support with capital management and cash flow, profit margins, monitoring KPIs or fundraising, etc.

In this blog we explain the value a part-time (or fractional) CFO brings to a business and answer the following questions:

What is a part-time CFO?
How can they add value to your business?
What do you need to consider before appointing a part-time CFO?
What key skills must they possess?
How do you start the recruitment process?

What is a fractional CFO?

Access to the support and guidance of a seasoned CFO is an essential investment for any business looking to grow, but who can afford a six-figure salary at this early stage?

Using fractional CFO services is a sensible first step growing in popularity amongst ambitious companies.

They can provide all the skills of a full-time finance director without the cost or commitment.
A flexible resource, available as and when required, a few days a week, a few days a month or on a project-by-project basis.
They will have hands-on experience dealing with the financial challenges your business now faces – and is yet to face!
They will give an objective opinion based upon the best financial and commercial information for the business; they are independent of the company and have no internal political views.
With corporate advisors like iFD, finding a fractional FD with knowledge of your industry sector and stage of growth is not as difficult as you might think.
They will improve credibility with external stakeholders and reassure investors that their funds are in safe hands and the management is focused on growing the business.
The CEO can continue to concentrate on company leadership, innovation, and revenue-generating activities without being distracted by accounting and finance responsibilities.
When it comes to the point when a full-time FD becomes a viable option, they can help with that transition.

When a company is growing, there’s often no need for a full-time CFO; those who do bring in a heavyweight find that much of their time is spent on low-value activities.

How can they add value to your business?

The value that they can add is varied but could include any of the following:

To act as a strategic advisor and a sounding board for the CEO.
To review the systems, processes, and reporting controls to ensure best-practice accounting policies and procedures and build a solid accounting foundation for scaling.
Prepare the business for, and initiate, a fundraise.
Structure, monitor and optimise cash flow and capital management.
Manage external stakeholders such as investors, bankers, lawyers, and auditors. While jointly, your stakeholders have a vested interest in the success of the business, they also have their priorities and requirements which need to be understood, managed, and met.
Introduce timely, accurate and relevant reporting to increase the visibility of performance and support informed decision making.
Assess the cost drivers within the business and identify where savings can be made.
Provide leadership and build finance function with a team that is trained and continually developed.
Prepare the business for exit.

What do you need to consider before appointing a fractional CFO?

Whatever your requirement, before beginning the search for a fractional CFO, we advise thought is given to what and who you are looking for.

Firstly, have a clear understanding of your need:

Why do you need a CFO?
What do you expect them to deliver?
For how long do you need their services?
How much are you going to pay them?

For example, the brief may be to support a fundraise, in which case the arrangement will have a finite duration. On the other hand, the CEO may require strategic advice, a sounding board and an ongoing relationship.

It’s essential, therefore, to determine what type of individual would work well within the business and recruit someone who exemplifies the culture of the company.

What skills must a fractional CFO possess?

It’s a given that the fractional CFO needs technical knowledge and expertise. Still, it’s also essential to consider the skills and experience that differentiate one CFO from another:

They should have the ability to provide industry insight and strategic support to the CEO.
A track record of working with companies at a similar stage of growth, for example, an operational CFO required for a business in steady state will have a different skill set to a fundraising specialist or a turnaround expert.
Provide experience in delivering the type of project you want them to deliver.
We’ve mentioned this already, but it’s worth restating; they must have the right cultural fit within your business.

How do you start the recruitment process?

Finally, don’t rush it. Take your time. Talk to a few individuals before making the final decision.

iFD have a wealth of experience providing part-time CFOs. If you think we can help, please get in touch.

Author’s Biography

Written by Karen Stocker, Digital Marketing Professional who has worked for Isosceles since 2004.

Connect with Karen on LinkedIn

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